ESG research, ratings and data provider Sustainalytics announced today the launch of its EU Taxonomy Solution, enabling institutional investors to access detailed insights into the environmentally sustainable activities of companies in order to assess company- and portfolio-level alignment to the climate change mitigation objective of the EU Taxonomy, and to fulfill their regulatory and reporting requirements.
The EU Taxonomy is part of the EU Action Plan on Sustainable Finance, established by the EU Technical Expert Group on Sustainable Finance’s (EU TEG). The taxonomy is a classification system enabling the categorization of economic activities that play key roles in contributing to at least one of six defined environmental objectives, and no significant harm done to the other objectives. The six objectives include climate change mitigation; climate change adaptation; sustainable use and protection of water and marine resources; transition to a circular economy; waste prevention and recycling; pollution prevention and control; and protection of healthy ecosystems.
The first reporting requirements for financial markets participants are set to take effect in January 2022, relating to the taxonomy objectives of climate change mitigation and climate change adaptation.
According to Sustainalytics, the EU Taxonomy Solution contains new activity-based research, which evaluates the proportion of a company’s taxonomy-eligible revenues, capital expenditures and operational expenditures, and builds on the company’s ESG research products to assess compliance with the ‘do no significant harm’ and ‘minimum safeguards’ criteria. The solution is designed to enable investors to conduct portfolio management and reporting on Taxonomy alignment, screen portfolios to flag and engage with companies that do not comply with the ‘do no significant harm’ and ‘minimum safeguards’ criteria, and construct sustainable products and portfolios.
Anne Schoemaker, Sustainalytics’ Associate Director of Product Strategy and Development, said:
“We are proud of the granularity our activity-based research offers to investors. While the EU Taxonomy regulatory requirements are still being defined, investors have a comprehensive solution to identify environmentally sustainable activities, construct credible sustainable investment products, and leverage it for a variety of other investment purposes. As the regulation evolves, Sustainalytics will further enhance its EU Taxonomy Solution to help investors on their compliance journey.”