NEW YORK (April 27, 2021) — ISS ESG, the responsible investment arm of Institutional Shareholder Services Inc. (ISS), today announced the launch of ISS ESG’s SFDR Principal Adverse Impact Solution. The new solution is designed to facilitate compliance by financial market participants with the new European Union Sustainable Finance Disclosure Regulation (EU SFDR) and to facilitate reporting on “Principal Adverse Impacts” for products and portfolios distributed within the EU. ISS ESG has reviewed the Regulatory Technical Standards (RTS) pertaining to the SFDR and mapped the principal adverse impact draft requirements to its proprietary ESG data.
The new EU SFDR requires covered market participants to use the core mandatory indicator set comprising 14 indicators for investments in companies, two for investments in sovereigns and supranationals, and two for investments in real estate assets. Moreover, market particpants will have to choose at least one additional indicator from each of the optional categories.
As of April 2021, the ISS ESG SFDR Principal Adverse Impact Solution covers a universe of more than 7,000 corporate issuers and 190 countries. For specific climate and social indicators, ISS ESG provides a significantly larger universe of up to 25,000 corporate issuers. Certain indicators are highly sector-specific and ISS ESG leverages its decades-long proprietary ESG research and assessment experience to assess relevance and materiality of the indicator to the industry in question, which defines the number of companies considered for data collection for each metric.
Till Jung, Managing Director and Global Head of ESG Products at ISS said: “ISS ESG’s dedicated and tailor-made solution has mapped both the mandatory and additional indicators for corporate and sovereign/supranational assets, leveraging justifiable proxies in the absence of disclosed data, enabling market participants to measure the performance of their investments against the SFDR-defined indicators and metrics in order to comply with the new reporting obligations.”
The ISS ESG SFDR Principal Adverse Impact Solution will soon be augmented with automated portfolio analysis and reporting capabilities.
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
Executive Director, ISS