Compliance reporting

ESG/SFDR

High need for action on sustainability funds: in March 2021 the Sustainable Finance Disclosure Regulation comes into force

With the two-stage Sustainable Finance Disclosure Regulation (SFDR), the EU provides for uniform reporting requirements for sustainability criteria. The comprehensive first stage of the SFDR will apply from 10 March. According to this, the ESG strategy, characteristics and calculation methods must be demonstrably measured and stated on websites and in sales prospectuses. Even though the extensive Level 2 reporting requirements are expected to be postponed until 1 January 2022, there is still an urgent need to act.

what this means for your reporting

While Level 1 information may initially still be qualitative, by March 2021 all relevant portfolios – including target funds – must already be being assessed according to the actual criteria. Information on ESG strategy, ESG characteristics and monitoring methods must be provided in your sales prospectus (precontractual) and on your website.

The challenge lies in consolidating the ESG data of all assets contained in a fund or portfolio in a methodically correct way and in SFDR-compliant disclosure. The alignment of different scoring methods for target funds, instruments and issuers is particularly important.

our solution: arep ESG | SFDR

Launch your sustainable Article 6, 8 or 9 portfolios early and be SFDR-compliant – with our arep platform solution for regulatory reporting. We collect the correct ESG ratings for you centrally, cost-effectively and reliably and provide the required information in very little time.

Once the final Level 2 RTSs are available, and on the basis of the Level 1 specifications graded according to market practice, we will support you in preparing sales prospectuses, annual reports and regular product information for your website, as well as pin rocessing new fields of MiFID-II-EMTs, PRIIPs-EPTs, Solvency-II-TPTs, and ESG-EETs. We are represented in the EFAMA working groups FinDatEx and are involved in the standardisation of data exchange.

With the arep SFDR application and our managed service, you benefit from ESG-compliant data, method alignment, all calculations and documents as well as web services from one source. The services in detail:

Consulting: sustainable product positioning and alignment of investments; optional: identification of the regulatory gaps relevant for your company, individual options for action and roadmaps including valuation
ESG data sourcing: central and cost-effective sourcing of ESG scoring data (refinitive; optional Morningstar, MSCI or S&P via customer license) as well as look-through data collection from asset managers and platforms with regular updates
ESG scoring: allocation of scoring data; classification of missing instruments or issuers according to specifications; determination of individual scorings for illiquid products based on raw data (gif-IDA, NACE, EET); e.g. for debt, real estate and private equity funds
Data standardisation: alignment of scoring scales, especially for third-party funds/target funds with different ESG data providers; resolution of inconsistencies between different providers/sources
Calculation and aggregation: calculation of ESG ratios and ratings at portfolio level; aggregation of holdings according to SFDR mock-ups
Compliance: constant review of portfolios (e.g. fund holdings and customer investments) for compliance with ESG strategy and SFDR requirements; reconciliation with portfolio management
Risk assessment: assessment of future scenarios for the probability of ESG compliance; analysis of risk factors
Support for decision making: measurement of the effects of portfolio changes on ESG compliance and ESG risks
Publication: publication of the Level 1 and RTS Level 2 reports as well as standardised exchange data, e.g. via EMT, EPT, TPT, EET; support in internet design and product description

The advantages of the arep all-in-one SFDR solution

Early and SDFR-compliant positioning of your products according to articles 6, 8 and 9 with all documents and calculations as of 10 March 2021
Cost-effective sourcing of ESG scoring data
Integrated collection and adjustment of scores for third-party funds (look through)
ESG and EU taxonomy-compliant calculation of scoring data for liquid instruments and optionally for illiquid investments
Integrated Level 1 and Level 2 service: documents, texts, tables and graphics for your sales brochures, annual reports, product and website
Integrated data usage for EMT, EET, EPT, TPT and AIFMD data fields
One-Stop-Service with: Market practice consulting, data management, calculations, managed service
Use of arep platform for further reports like PRIIPS/MiFID, SolvencyII, AIFMD, CRR Solva, VAG/GroMiKv etc.