Leading credit ratings, benchmarks and analytics provider S&P Global announced today the launch of the SFDR Data Solution, aiming to help investors meet disclosure requirements under the European Unions’ new Sustainable Finance Disclosure Regulation (SFDR).
The EU SFDR, which went into effect in March, forms part of the EU’s Action Plan on financing sustainable growth. The regulation establishes harmonised rules for financial market participants including investors and advisers on transparency regarding the integration of sustainability risks and the consideration of adverse sustainability impacts in their processes and the provision of sustainability‐related information with respect to financial products.
Disclosures mandated under the new regulations for financial markets players include reporting on the manner in which sustainability risks are integrated their into investment decisions, and assessments of the likely impacts of sustainability risks on the returns of financial products. Data collection and analysis form some of the key challenges of the new regulation for investors.
According to S&P Global, the new SFDR Data Solution draws on a wide range of ESG datasets from S&P Global, including Trucost Environmental data, Sovereign Carbon Exposure, Physical Risk, S&P Global ESG Scores, and other datasets from the S&P Global Capital IQ platform. to identify the sustainability risks associated with investments. These datasets will enable investors to understand companies’ carbon emissions and energy consumption, the impact of climate change on physical assets and broader performance on a range of different ESG factors.
The S&P Global data is mapped to align with the principal adverse impact indicators (PAIs), one of the key disclosure requirements under the new regulation.
Steven Bullock, Global Head of ESG Product Innovation and Analytics at S&P Global, said:
“Under the new regulation, investors will be required to assess and disclose the negative sustainability impact of their portfolios. Investment managers are seeking a comprehensive range of ESG data to meet their requirements under SFDR. Leveraging the dataset we have built for the SFDR, investors will be able to access a comprehensive range of robust and high quality ESG data to identify the sustainability risks of their investments and disclose in line with the SFDR requirements.”