NEW YORK (January 19, 2021) — ISS ESG, the responsible investment arm of Institutional Shareholder Services Inc. (ISS), today launched a dedicated EU Taxonomy Alignment Solution that offers over 400 taxonomy-specific screening factors across a five-step screening process.
The taxonomy regulation establishes an EU-wide classification framework, enabling firms to identify economic activities and investments that can be treated as ‘environmentally sustainable’. ISS ESG’s EU Taxonomy Alignment Solution enables asset managers, pension funds, insurers, banks and other investors to identify the level of alignment of their investments and financial products with those defined taxonomy activities and quantify respective revenues in order to comply with upcoming disclosure obligations.
ISS ESG’s EU Taxonomy Alignment Solution assists in the analysis of investments against relevant taxonomy activities, which have so far been defined for the first two of the six current taxonomy objectives – the six being: climate change mitigation; climate change adaptation; sustainable use and protection of water and marine resources; transition to a circular economy; waste prevention and recycling; pollution prevention and control; and protection of healthy ecosystems.
Taxonomy relevant activities are assessed by ISS ESG according to a rigorous five-step process which consists of identifying relevant economic activities, quantifying respective revenues, checking for substantial contribution, checking for significant harm and checking for social safeguards.
All financial market participants with relevant products marketed in the EU will be required to report alignment, starting with the first two taxonomy objectives, climate change mitigation and climate change adaptation, by January of next year. Marija Kramer, Managing Director, Head of ISS ESG said: “Preparing for the upcoming disclosure requirements will present a key challenge for investors in 2021 and beyond. ISS ESG has pioneered an innovative, dedicated EU Taxonomy Alignment Solution, which is the most comprehensive in the market. The solution provides full transparency with granular data and allows users to follow the assessment step-by-step and to customize the model according to their needs.”
By way of background, together with consultancy partner adelphi and on behalf of the German Ministry for the Environment, ISS ESG conducted a pilot study, launched last year, assessing the degree of taxonomy alignment of 75 European listed companies, a first of its kind study in taxonomy research. ISS ESG’s rating methodology and the EU taxonomy are aligned in approach with regard to how an economic activity should be assessed in terms of its contribution to sustainable development. Both consider the impacts associated with an activity holistically along the respective value chain and are highly sector-specific.
Building on this success, the ISS ESG EU Alignment Taxonomy Solution has launched with an initial coverage universe of more than 6,000 companies, to be expanded on a going forward basis.
About ISS ESG
ISS ESG solutions enable investors to develop and integrate responsible investing policies and practices, engage on responsible investment issues, and monitor portfolio company practices through screening solutions. It also provides climate data, analytics, and advisory services to help financial market participants understand, measure, and act on climate-related risks across all asset classes. In addition, ESG solutions cover corporate and country ESG research and ratings enabling its clients to identify material social and environmental risks and opportunities. For more information, please visit us at: www.iss-esg.com
Sarah Ball, Executive Director