ISS ESG - EU Taxonomy Alignment Solution

Data category

EU Taxonomy Alignment Solution

Brief description of the data offering

ISS ESG has developed a dedicated EU Taxonomy Alignment Solution that offers more than 400 taxonomy-specific screening factors across a five-step screening process. ISS ESG's EU Taxonomy Alignment Solution enables asset managers, pension funds, insurers, banks and other investors to identify the level of alignment of their investments and financial products with defined taxonomy activities and quantify respective revenues in order to comply with the upcoming disclosure obligations.

Technical screening criteria have only been defined for activities substantially contributing to the first two of the taxonomy objectives; until the activities for the remaining four objectives are defined and fall within scope, ISS ESG's solution focuses on climate change mitigation and climate change adaptation. ISS ESG intends to cover all Taxonomy relevant activities, once their respective assessment criteria are finalized and the requirement brought into scope under their staggered reporting obligations.

Each issuer is assessed against 74 activities across more than 400 factors, with the number of activities and relevant factors contained within the solution increasing alongside the scope of the regulation. Each activity is assessed in line with a five-step process to evaluate overall alignment of company revenues:

ISS-eu-taxonomy-alignment

As per the Taxonomy Regulation, ISS ESG's solution also segments revenues generated from Taxonomy relevant activities into one of three categories, "green", "enabling" and "transition":

  • Green activities: Activities that in and of themselves contribute substantially to one of the objectives
  • Transition activities: Activities for which there are no technologically and economically feasible low-carbon alternatives, but that support the transition to a climate-neutral economy in a manner that is consistent with a pathway to limit the temperature increase to 1.5 degrees Celsius above pre-industrial levels, for example by phasing out greenhouse gas emissions
  • Enabling activities: Activities that enable a substantial contribution to one or more of the objectives in other sectors of the economy.

Further, ISS ESG supports clients of the EU Taxonomy Alignment solution with a separate transparency document that provides insights into data driving the results and the outcomes generated by the model.

In a further scheduled update, anticipated to be released no later than Q3 2021, ISS ESG will include a portfolio reporting function to allow for automized Taxonomy alignment reporting at portfolio level. Further updates and enhancements are already in the pipeline and to be completed throughout 2021.

Where and how do you source your data?

Data is primarily sourced from publicly available information, including a company’s own disclosure and reporting, proxy statements, reputable news, governmental and international institutions, recognised international or local non-governmental organizations, and non-biased subscription databases such as the CDP.

Who are the data users?

Data is used by a broad range of institutional investors, asset managers, asset owners, fund managers, banks, government institutions, universities and research firms.

What is the cost for your data offering?

Pricing is based on the method by which data is delivered.  ISS ESG can provide data via its proprietary platform, DataDesk, or via data feed. Pricing for this solution is available upon request.

What are the key attributes that differentiates the data you offer?

  • ISS ESG provides robust screening and distinct indicators for all five steps of the process - going beyond other providers in terms of completeness and rigorousness.
  • ISS ESG provides a granular level of revenue assessment, including Likely Aligned, Potentially Aligned and Likely Not Aligned revenues. This allows for different approximations of alignment.
  • A specific and tailored solution dedicated to EU Taxonomy compliance and reporting
  • A complete solution – ISS ESG will cover all relevant activities in the final product, which will be developed in conjunction with the finalization of the relevant taxonomy guidance and criteria.

Tweet

Are you prepared? @ISSESG’s #EUTaxonomy Alignment Solution enables financial market participants to identify the level of alignment of their investments and financial products with defined taxonomy activities.

Find out more: https://www.issgovernance.com/esg/regulatory/eu-taxonomy/

#ESG #ResponsibleInvesting

Contacts

Maximilian.Horster@iss-esg.com

Corporate Statements

Turning knowledge into action

Maximilian Horster, head of ISS ESG, foresees several trends will shape the environmental, social and governance (ESG) investment space over the next 12 months. Environmental Finance spoke with him to see how ISS ESG is tailoring its data, index and reporting solutions as a result

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