Sustainable Finance

Sustainable Finance Regulation

With the growing shift towards sustainable investing, new regulation means navigating the sustainable landscape can be challenging.

Multiple pressures, including investor, societal and environmental, have resulted in increased numerous sustainable finance regulation affecting corporates to fund managers.

Greater regulation allows market participants to navigate the investment landscapes more safely, encourages standardisation across the market and ensure relevant disclosure is available. In turn this enables investors to make an active choice to invest sustainably and play their part in supporting the development of a more sustainable economy.

To reach the Paris Agreement and reduce the impacts of climate change, a range of regulatory efforts have been put in place to positively impact the market that we serve.

LSEG can help you meet regulatory reporting requirements.

How we help

Helping you navigate sustainable regulation

EU Taxonomy

The EU taxonomy is a classification tool to help investors and companies consistently determine whether an economic activity is environmentally sustainable or not. It provides specific, quantitative thresholds on environmental performance for economic activities to be considered compliant with the EU taxonomy allowing market participants to navigate the transition to a low-carbon economy.

The EU taxonomy for sustainable activities is based around six environmental objectives:

1.   Climate change mitigation
2.  Climate change adaption
3.  Sustainable use and protection of water and marine resources
4.  Transition to a circular economy, waste prevention and recycling
5.  Pollution prevention and control
6.  Protection of healthy ecosystems

The LSEG EU Taxonomy data solution allows market participants to identify and report on the proportion of their portfolios which are eligible or aligned to EU taxonomy objectives. The data can help identify exposure to climate transition risks and identify opportunities for investment in companies undertaking green activities.

Discover more about LSEG’s EU Taxonomy solutions and LSEG Lipper’s coverage of European ESG related fund disclosures required by the EU Taxonomy.

Learn more about how LSEG partnerships can help market participants meet EU Taxonomy standards.

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Data used in the LSEG EU Taxonomy Data Solution

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LSEG EU Taxonomy data in action

SFDR

The Sustainable Finance Disclosure Regulation (SFDR) introduces disclosure standards for financial market participants, advisors and products.

The aim of the regulation is to minimise greenwashing and to provide a transparent view into sustainability investments for the end investor. To meet the SFDR, asset managers need accurate and trusted data. This is where LSEG can help.

LSEG has a solid coverage across SFDR related metrics which fuel our solutions both via desktop and feed, including full coverage of SFDR level 1 data for funds registered for sale in Europe which is being expanded to incorporate all new SFDR level 2 data.

Further, our partnership with Clarity AI allows you to create ready-to-use SFDR reports at scale for compliance purposes.

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SDFR template in Portfolio Analytics app

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SFDR details displayed in LSEG Lipper for Investment Management.

TCFD

The Task Force on Climate-Related Financial Disclosures (TCFD) provides recommendations for more effective climate-related disclosures that promote more informed investment, credit and insurance underwriting decisions.

The TCFD enables stakeholders to understand carbon-related assets and exposure to carbon-related risks.

TCFD disclosure recommendations are structured around four core elements that investors expressed interest in and represent how organisation operate:

  • Governance
  • Strategy
  • Risk Management
  • Metrics and targets

At LSEG, we have mapped our climate-related data to ensure our methodologies and data measures are aligned to the TCFD recommendations.

Discover more about LSEG’s ESG Reporting Solutions, a user friendly data collection and automated emissions calculation system for corporates.

MiFID and IDD (Insurance Distribution Directive)

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Fund overview in LSEG Workspace, displaying key attributes featured in the European ESG Template

Both MiFID and IDD have added the requirement that recommendations to customers and potential customers should reflect both the financial objectives and any sustainability preferences expressed by those customers.

The aim is to ensure investors can invest and save sustainably and to facilitate their participation in the transition to a low carbon, more sustainable, resource efficient economy.

For funds, LSEG is expanding its coverage of SFDR level 1 data to incorporate all the new ESG and sustainability disclosures required to comply with MiFID and IDD. This will enable customers to screen for suitable fund products, and to confirm the sustainability of each fund.

Discover more about LSEG Lipper’s coverage of European ESG related fund disclosure required by MiFID and IDD regulations.

Sustainable Finance

Sustainable finance services and solutions

We use our data, forward-thinking technology, and expertise to help you make sustainable investment decisions, mitigate risk and generate performance.

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