Is your ESG data strategy clear?

There is significant concern for firms when sourcing the right information to populate their European ESG Templates (EET), or sourcing information to satisfy their Sustainable Finance Disclosure Regulation (SFDR) reporting obligations.

Disclosures for the SFDR pre-contractual template are imminent, with an end of October prospectus submission required by the regulators. Alongside these disclosures, there is foresight required for the information required for the periodic disclosure template. Synergies will be realised in adopting a holistic approach to information sourcing for both templates, forming an understanding of where the current gaps reside and documenting a clear methodology and rationale for decisions made. Clarity in this picture can help establish the right governance requirements to support information estimates and proxies. Building a repeatable process is key!

The ESG data market is far from mature, and as more information becomes available, investment managers will require continued focus on how the coverage evolves and how the methodologies followed by data vendors align with their investment process. As it stands, there can be significant variation between vendors output, so selection of the right vendor is important. Firms must be clear on their strategy and be able to effectively communicate how ESG risk is considered within the investment process. Your clients will expect clarity!

Our team has researched over 45 ESG data vendors and ESG financial technology solutions, giving us a strong understanding of the different capabilities in the market. Through working closely with such vendors, we have gained insight into how the market is evolving and the different focus areas each vendor has. We know the market!

We have drafted the taxonomy for services/solutions supplied in this market and we are working with the industry to refine it. This will allow investment managers to efficiently understand services provided by vendors, and how they compare. If you would like a copy of the taxonomy, then please get in touch with your relationship contact.