EU Taxonomy tool unveiled to assist in meeting reporting requirements

By Natasha Turner

Global ESG ratings provider Sustainalytics has launched a tool to help institutional investors comply with upcoming EU regulatory reporting requirements.

Its EU Taxonomy Solution shows how companies align with the climate change mitigation objective in the Taxonomy, helping investors with their reporting, for which the first requirement will take effect on 1 January 2022. It plans to cover more than 12,000 companies across 80+ Taxonomy activities by the end or 2021.

To do so, it evaluates the proportion of a company’s Taxonomy-eligible revenues, capital expenditures and operational expenditures, as well as assessing company compliance with the ‘do no significant harm’ and ‘minimum safeguards’ criteria.

An example report shows at the top an alignment overview, laying out revenues, capital expenditure and operational expenditure. This is followed by an overview of the company’s economic activities, showing which are aligned and which are not, with a more detailed breakdown of each activity. Finally, there is an analysis of each activity.

“We are proud of the granularity our activity-based research offers to investors,” said Anne Schoemaker, Sustainalytics’ associate director of product strategy and development.

“While the EU Taxonomy regulatory requirements are still being defined, investors have a comprehensive solution to identify environmentally sustainable activities, construct credible sustainable investment products, and leverage it for a variety of other investment purposes. As the regulation evolves, Sustainalytics will further enhance its EU Taxonomy Solution to help investors on their compliance journey.”

To help investors on their compliance journey, Sustainalytics also hopes the tool can be used for portfolio management and reporting, company screening, product and fund construction and engagement with those companies that don’t meet the criteria.