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Purpose-built solutions to streamline your regulatory responses
Regulatory Data Solutions

The responsible investment landscape is continually evolving due to new standards for disclosure and innovation, and the pace of regulatory change is only expected to increase in years to come. In major jurisdictions all over the world, new bodies of ESG-focused legislation are being contemplated, trialled, or brought into force. Driven by demand from consumers, governments, and the investment community itself, these increasingly complex regulatory initiatives are transforming the way we do business.
However, much of the market is still in the very early stages of adapting its policies and reporting practices, leading to meaningful disclosure gaps. As such, the task of ensuring that “sustainable investments” live up to their name is far from simple, and the same goes for the regulations themselves, which place a significant analytical burden on market participants. Against this backdrop, insightful and reliably-sourced data is the key to both compliance and innovation.

The jurisdiction seeing the most rapid change is the EU, where the EU Sustainable Finance Disclosure Regulation (SFDR) now requires investors to make mandatory ESG disclosures in order to combat greenwashing. Alongside it, the EU Taxonomy regulation has established a science-based classification system for identifying genuinely green activities and practices.

Enabling you to streamline your responses to these evolving regulatory demands, Moody’s ESG Solutions provides purpose-built datasets containing only relevant information for the disclosure requirement in question.
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With Moody's ESG Solutions, you can:

Extract accurate insights allowing you to respond to the SFDR and EU Taxonomy’s ESG disclosure requirements

Go beyond compliance – apply our ESG data to identify opportunities, develop labelled funds, indices and benchmarks in accordance with current and emerging standards

Our Comprehensive Offering
What is the SFDR?
The EU Sustainable Finance Disclosure Regulation (SFDR) aims to combat greenwashing by introducing a series of Principal Adverse Impact (PAI) indicators – essentially ESG topics, such as greenhouse gas emission levels, on which investors are expected to make mandatory disclosures.

In effect since March 2021, the SFDR requires all EU financial markets participants with over 500 employees – such as asset managers, pension funds, banks, and insurers – to make standardized disclosures about the sustainability risks present within their operations and investments.

The mandatory disclosures are structured to capture risks both at the business and product levels. Smaller companies, while not legally required to make such disclosures, are nonetheless encouraged to do so, and must submit a detailed written explanation if choosing not to.

In addition, the SFDR proposes a significant set of voluntary disclosures which are viewed as increasing investor confidence, and further reducing the likelihood of greenwashing.
Our Solution
Our approach is rooted in our ESG analysts’ intimate understanding of the SFDR. We have studied the regulations in depth to build our analytical framework from scratch and – where disclosure gaps exist – we use our in-house expertise to uncover the most relevant underlying data from alternative sources.
  • Comprehensive: we screen for data spanning every one of the mandatory PAI indicators laid out in the regulation
  • Consistent: we use uniform units of measurement to ease comparison across companies
  • Granular:
  • For those indicators with ambiguous definitions, such as ‘Exposure to controversial weapons’, we have developed a process to capture degrees of exposure, dividing companies into those showing No evidence, Some evidence and Clear evidence of involvement. This extra layer of granularity is available through our Controversial Activities Screening product;
  • Likewise, our Controversy Monitoring & Alerts product sheds extra light on indicator 10 ‘Violations of UN Global Compact principles and Organisation for Economic Cooperation and Development (OECD)’ by going beyond companies’ policies to demonstrate their actual level of involvement in illegal or controversial activities;
  • Transparent: we include information on our data sources for transparency and ease of reference, adding clear labels to show whether the data behind each indicator is derived from actual disclosures, or extrapolated from other relevant sources we have uncovered
What is the EU Taxonomy?
The goal of the EU Taxonomy regulation is to provide market participants with clear, structured guidance enabling them to identify green and sustainable activities. This empowers the market to channel capital towards projects and investments which increase resilience to climate and environmental events.

In essence, to invest sustainably, one must first define sustainable investment. Since coming into effect in July 2020, the EU Taxonomy has done this by establishing a list of carefully-defined environmentally sustainable economic activities, with each falling into one of six key categories, such as “Climate change mitigation” and “The transition to a circular economy”.

Significantly, as of January 2022, the regulation also places a meaningful reporting obligation on companies operating in the EU. Specifically, it requires those with over 500 employees to disclose their sustainability objectives, and the percentage of their business activities which meet the Taxonomy’s standards for sustainability. What’s more, it obliges asset managers, banks, and others offering financial products to follow suit, while also providing details of the specific environmental objectives to which their investments contribute.
Our Solution
As with the SFDR, our first step in building our EU Taxonomy solution was to study the regulations in depth and build an exhaustive analytical framework from scratch.
  • Detailed: our analysis first identifies which of a company’s activities meet the EU Taxonomy’s eligibility criteria, and then produces both a consolidated view of the company’s overall alignment with the Taxonomy’s specifications, and a breakdown of its alignment activity by activity
  • Intuitive: the output for each activity the company is engaged in is expressed as a percentage of turnover/CAPEX/OPEX for easy comparison
  • Thorough: we cover the full scope of the regulation, including:
  • Determining whether an activity makes a Substantial Contribution to one of the EU Taxonomy’s environmental objectives, such as ‘Climate Change Mitigation’;
  • Ensuring that it meets with the requirements falling under Do No Significant Harm (e.g., that the pursuit of that one activity does not significantly harm any of the others, such as protecting our ecosystems);
  • And that it is aligned with the Minimum Social Safeguards (e.g., that it respects widely accepted environmental conventions and principles, like those established by the UN and OECD);
Our Data
We use a hybrid data extraction model to capture the most complete picture of an investee company’s activities. AI flags the most relevant material, and our experienced ESG analysts verify it every step of the way

Data is drawn from corporate reporting, carefully validated news analysis, and direct engagement with companies

All data is referenced to its source with clear definitions and methodologies made accessible to users

Product Access
Intuitive Excel datasets allow easy assessment and comparison of company disclosure levels and regulatory alignment across your investment universe

Available via SFTP and API

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