Sustainalytics Launches its Principal Adverse Impact Data Solution

Sustainalytics, a Morningstar Company and a globally-recognized provider of ESG research, ratings and data, today launched its Principal Adverse Impact (PAI) Data Solution, an ESG dataset with rich corporate- and sovereign-level research that aligns with the current PAI indicators. The European Union’s Sustainable Finance Disclosure Regulation (SFDR), which takes partial effect on March 10, 2021, introduces new rules for how investment managers need to incorporate and disclose sustainability risks and factors. With Sustainalytics’ PAI Data Solution, investment managers can identify and understand the adverse sustainability impacts of their investments to fulfill the SFDR requirements.

The SFDR requires fund managers to classify their funds as grey, light green, or dark green, requiring changes to product documentation and marketing materials, with stringent reporting requirements for green funds. Specifically, investment managers will need to report on how they assess whether portfolio companies comply with global standards, such as the UN Guiding Principles on Business and Human Rights. In addition, investment managers will be required to disclose how their investments may negatively impact sustainability factors or the principal adverse impacts of their investments. Leveraging Sustainalytics’ PAI Data Solution, investment managers have access to a wide range of indicators and metrics to support them with their mandatory entity-level PAI reporting as well as product-level periodic reporting.

To fully comply with all the various SFDR requirements, investment managers will need a comprehensive set of ESG research solutions to identify and manage both ESG risks and potential adverse sustainability impacts. Sustainalytics’ Client Advisory team can guide investors on the diverse requirements, helping them to find the right ESG research solutions to meet their firm-wide needs. The PAI Data Solution complements and builds on Sustainalytics’ established, high-quality ESG research that already currently aligns to the remainder of the SFDR requirements.

“Given the multifaceted aspects of the SFDR regulation, investors need a holistic, consistent approach to ESG across the entire investment value chain,” said Anne Schoemaker, Sustainalytics’ Associate Director of Product Strategy and Development. “With Sustainalytics’ PAI Data Solution, investors can count on robust data coverage, trustworthy research, and flexible reporting capabilities to respond to the various regulatory requirements. We look forward to working with investors at every step of their compliance journey.”

In addition to Sustainalytics’ PAI Data solution, the firm also offers an EU Taxonomy Solution and an EU Benchmarks Solution.