SFDR Reporting Solution

New SFDR regulations present an opportunity to find more transparency in ESG investing

Learn how our SFDR Reporting Tool empowers you to make the best financial choices for your clients with their needs in focus.

New SFDR regulations present an opportunity to find more transparency in ESG investing

The Sustainable Finance Disclosure Regulation (SFDR) looks to create a standard set of disclosures and grow transparency around sustainability risks and adverse sustainability impacts to investment products.

This disclosure requirement covers three main categories:

1. The adverse impacts of investment decisions on sustainability factors

2. The consideration of sustainability risk in an investment process

3. Provision of sustainability information with respect to financial products.

This regulation helps the movement of capital in the European Union (EU) to sustainable actions, while also increasing company disclosure requirements across E,S, and G issues.

See our free SFDR data library

What is SFDR?

The Sustainable Finance Disclosure Regulation (SFDR) requires funds to report on specific PAIs, and classify certain funds according to the following taxonomy:

Article 9: Sustainable investing must be the primary objective of the fund.

Article 8+
: Sustainable investing must be the primary objective of some portion of the fund's investments. There is no minimum sustainable investment percentage, but the fund' disclosures are binding at the time of initial investment and throughout the fund's lifetime.

Article 8: Sustainable investing is not the primary objective of the fund, but one aspect of the fund's strategy is investing in companies based on their positive environmental, social, and governance practices.

Article 6: These products do not have sustainable investing requirements, and must claim to use ESG as a binding or material investment factor.

The European Securities and Markets Authority also released Sustainability Preference requirements for advisors to diagnose which sustainable investment criteria their clients care about.

The biggest challenge of SFDR: Principle Adverse Impacts (PAI)

With the adoption of SFDR, the requirement to disclose new principle adverse impact indicators will substantially create more transparency across ESG investing. Though there are two types of disclosures, entity level disclosures which are based on a
comply or explain" principle, and product level disclosure which focuses on how firms achieve their sustainability goals based on reporting specific metrics and disclosed properly.

For firms that consider PAIs on sustainability factors, they have to file disclosures across ESG matters including specific indicators. Overall, there are 14 key indicators split between Climate and other environment indicators, and Social and governance indicators.

Our SFDR solution both helps in collecting and making all companies that have data on PAIs in one location, as well as develop tools and ways for advisors to easily compare and assess client values against these main metrics.

Guided by EU Frameworks

We built our sustainability preference questionnaire based on the EU's frameworks, and coverage across the three taxonomies so you can confidently stay in compliance with these new regulations.

Simple, repeatable processes for practices of all sizes

1. Education
Explain what "sustainability preferences" means for your client with simple and clear definitions without ESG jargon
2. Discovery
Determine if your client has sustainability preferences for their investments across key themes.
3. Capture
Understand and record-keep your client's sustainability preferences including specifically:
Minimum portion of investments that contribute to environmental ovjectives as defined by EU Taxonomy
Minimum portion of investments in 'sustainable investments' as defined by SFDR
Which SFDR PAIs they want their investments to consider

Take action from sustainability preferences

4. Provide Recommendations
Discover and select financial products based on your clients sustainability preferences
5. Report on investment changes
Showcase how sustainability preferences factored into the portfolio selection and see what impact is generated from the portfolio
Contact us to learn more


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