Intercontinental Exchange (ICE) announced the launch of a data solution for the European Union Sustainable Finance Disclosure Regulation (EU SFDR). ICE’s SFDR PAI Solution offers users event-triggered updates for all of the mandatory adverse sustainability indicators applicable to investments in companies, sovereigns and supranationals.
By requiring more transparency and standardization in the products offered by asset managers, the EU SFDR is designed to help investors compare among the growing number of investments with sustainable objectives. To achieve this goal, the EU SFDR requires financial market participants and financial advisors, at the firm-level and product-level, to identify and disclose sustainable impacts and whether and how each financial product considers enumerated Principal Adverse Impacts (PAIs), as defined in the Technical Standards recently adopted by the European Commission.
The EU’s PAI regime requires specifically formatted disclosure on ESG-related indicators, including greenhouse gas emissions, board gender diversity, and energy consumption ratios, which are available in a conveniently formatted file or web viewing tool to clients as part of ICE’s SFDR PAI Solution. The service allows customers to link equity and fixed income securities to the closest disclosing corporate entity, offering users a way to quickly match a security to the nearest parent entity with disclosed data.
“The transparency ambitions of the EU SFDR places new demands on asset managers and investment advisers,” said Elizabeth King, president of ESG and chief regulatory officer at ICE, in a statement. “ICE’s SFDR PAI Solution offers updated, granular values for the SFDR’s adverse sustainability indicators needed by market participants to meet SFDR requirements.”
PAI disclosure is expected to affect a meaningful portion of global asset managers, asset owners, portfolio managers and financial advisors with customers in the EU. ICE’s solution collects, calculates and normalizes data into formats closely aligned with the regulatory technical standards for ease of use by clients.