Our top tips for your EET

The European ESG Template (EET) is the latest data exchange template published by the FinDatEx working group. It aims to facilitate the transmission of standardised, machine-readable data relating to a product’s sustainability characteristics between product manufacturers and distributors.

Delivery of the template has been split into two, accommodating changes to the MiFID and IDD Delegated Acts prior to full SFDR requirements. Changes are effective from August 2022 and require advisors to adapt their suitability process to incorporate sustainability preferences.

• First up, the EET-light has been developed, to provide information to aid the suitability process. The EET-light has circa 60 fields and the intention was to enable this template for dissemination by 1^st June 2022.
• In October we will then see the implementation of the full EET, with circa 580 fields to choose from. These include a mix of mandatory, conditional and optional fields.

Most firms are now working hard to develop their EET and ensure that it accurately depicts products’ sustainability characteristics without misleading or greenwashing. Devlin Mambo have been helping our clients with EET planning and the build, whilst also addressing the impact future strategic and regulatory changes will have on the output.

To help you consider how to build an effective EET, here are our top 3 considerations:

1. Adopting a top-down vs. bottom-up implementation

Given the mechanical nature of the template it is tempting to adopt a bottom-up approach to creation. For example, one could look at the required fields, then populate the template with a limited view to the firm’s responsible investment strategy/ policy, portfolio integration, data availability, and product positioning. This could lead to potential misalignment, or the accidental inclusion of fields that should require additional scrutiny and governance sign-off.

Firms who wish to maximise their efficiency will first be considering their strategy and focusing on allowing this to inform how they populate the data. The overarching responsible investment project, or internal responsible investment committee, are the sensible places to start and most appropriate places to use to lead the template population.

2. Considering the implications

Following on from the above, it is important to allow your strategy to inform the fields you populate. Many will need governance signoff, which can hold back timelines; this should be factored into implementation planning so you don’t miss milestones. A good example here is the percentage of minimum sustainable investments - if you intend to enter these, this may require governance approval and consideration to ensure the figure remains tangible in the longer term.

You should consider what information is “nice to have” and what is achievable at any one point in time. With prospectus, pre-contractual template and website changes due in the months ahead, consider the impact of fields’ inclusion prior to the document updates.

3. Don’t forget the bigger picture

The EET should mirror everything else you have published. If it contradicts anything committed to elsewhere, you’re adding to the risk of scrutiny and greenwashing accusations. It should mirror your EMT, reflect sustainability information outlined in fund offering documentation and prospectuses, and align with statements published on your website. All of these will need to be considered as you populate and review the template.

To find out how Devlin Mambo can help you and your firm develop, review and reassess your own EET, please don’t hesitate to get in touch with a member of the team.