ESG and climate-focused insights and data provider Moody’s ESG Solutions announced today the launch of a bespoke ESG data solution aimed at helping market participants meet European Union Sustainable Finance Disclosure Regulation (EU SFDR) requirements. According to Moody’s the new product is one of the few purpose-built SFDR data solutions in the market.

The EU SFDR, which went into effect in March, forms part of the EU’s Action Plan on financing sustainable growth. The regulation establishes harmonised rules for financial market participants including investors and advisers on transparency regarding the integration of sustainability risks and the consideration of adverse sustainability impacts in their processes and the provision of sustainability‐related information with respect to financial products.

Among the new rules are requirements for financial market participants to disclose the principal adverse impacts (PAI) that investment decisions have on sustainability factors, based on a list of indicators encompassing climate and environment, as well as social and employee matters, respect for human rights, anti-corruption and anti-bribery aspects. Data collection and analysis form some of the key challenges of the new regulation for investors.

The new Moody’s ESG dataset covers 2,500 entities across 11 mandatory indicators, with plans to expand to all 18 indicators, and more entities, throughout 2021. Moody’s expects to add SFDR reporting tools to the solution later this year, enabling deeper insights into sustainability performance as part of an organization’s PAI disclosures.

Sabine Lochmann, Global Head of Moody’s ESG Measures, said:

“We are committed to advancing sustainability objectives and providing essential data that market participants can rely on. Incomplete data inputs will lead to many challenges when responding to SFDR requirements – our extensive dataset aims to help investors overcome that hurdle.”