The first level of the EU's Sustainable Finance Disclosure Regulation (SFDR) has been in force since March 10, 2021, requiring fund managers to disclose their sustainability risks policies and consideration of Principal Adverse Impacts (PAIs) on their websites, setting the ground for product-level disclosure in sales prospectus.
The currently available Regulatory Technical Standards (RTS) draft, including additional directives by the EU Taxonomy regulation, results in further compliance requirements for Level 2, both on entity and product levels.
The industry standard for data exchange will be the European ESG Template (EET). The final version of the format, which comprises around 700 fields, is expected to be available early 2022, to be used both for the SFDR disclosures and MiFID sustainability preferences.
Although the full entry into force of Level 2 has been postponed to January 1st, 2023, the first SFDR reference period begins on January 1st, 2022. Thus it is strongly recommended to adapt own reporting processes to the new requirements in time - ideally with an efficient holistic solution.
Capmatix Regulations automates the entire process: collect all sustainability metrics for your portfolio at product and entity level in compliance with regulations. Classify portfolios according to pre-definable Article 8 and 9 rules, ensuring that Principal Adverse Impacts, taxonomy KPIs and benchmarks comparisons are correctly reported. The well-structured dashboard allows you to monitor all processes and performance indicators at all times.
The creation of pre-contractual and annual reports is also automated. The SFDR module of Capmatix Regulations provides all new fields of MiFID-II-EMTs, PRIIPs-EPTs, Solvency-II-TPTs and the future ESG-EET exchange format and distributes the data to the desired platforms.
With the SFDR module of Capmatix Regulations and our managed service, you can manage all data centrally, produce compliant and detailed calculations and produce tailored documentation from one source.
ESG data sourcing: Centralized sourcing of ESG raw data (e.g. via MSCI, Sustainalytics-Morningstar, Refinitiv). Collection of look-through data from asset managers as well as platforms with regular updates. Integration of additional databases (e.g. Green Bonds, your own research, etc.).
Monitoring of ESG data: classification of missing issuers or instruments issuers, monitoring of PAI scores, data-points validations.
Data standardization: Normalisation/alignment of ESG related data-points, e.g. for third-party/target funds with different ESG data providers; resolution of inconsistencies between different sources/providers.
Calculation and aggregation: Calculation of PAIs, taxonomy alignment and ratings at portfolio and entity levels; aggregation of holdings according to SFDR mock-ups.
Compliance and Risk Management: Continuously review portfolios (e.g. client investments, fund holdings) for compliance with ESG strategy and SFDR requirements; Reconcile with portfolio management; alerts in case of minimum taxonomy alignment commitment breach; visualizing of sustainability indicator progress over time.
Production and Distribution:Production of regular pre-contractual reports (PAI statements and product annual reports), website updates, provision of standardised exchange data, e.g. via EMT 3.1, EPT, TPT, EET. Support with homepage design and product descriptions.
Regulatory watch: We are represented in the different industry associations and the FinDatEx working group that defines the EET. Whenever there are changes, we analyse them and inform our clients about the updates and needed actions.
Consulting: We not only help you define the narratives for the regulatory documents, but also can provide analysis of your ESG strategy at company and product level, data provider comparison, definition of front-back processes, regulatory requirements, etc. We support you holistically or in individual points, depending on your current needs.