The ESG Data Deluge: Sink or Swim for Companies and Investors

When it comes to ESG reporting and sustainability strategy, it’s clear that companies are stepping up their game – and just in time, as there is an avalanche of disclosure requirements coming their way. It’s coming for investors too, who may find that an energized base of issuers knows a thing or two about ESG data reporting.

SFDR Draft Principle Adverse Impacts Indicators: Company-Level Data Availability

Institutional investors may need to report on an array of new ESG metrics for their companies if the European Union’s Sustainable Finance Disclosure Regulation (SFDR) is finalized in its current form. Most companies are underprepared for this possibility in terms of their current disclosures. The table below lists the 32 principal adverse impact indicators that were originally put forward by the European Supervisory Authorities in their joint consultation paper on ESG disclosures, together with MSCI ESG Research’s assessment of data availability for constituents of the MSCI ACWI IMI.

Source: MSCI ESG Research. Data for constituents of MSCI ACWI IMI as of Nov. 12, 2020.

Rate Of Disclosure: Principal Adverse Impact Indicators For Corporate Issuers

The final report on the SFDR Regulatory Technical Standards (RTS) was released on February 2nd, 2021. The report expanded the number of indicators from 50 to 64, including disclosures pertaining to sovereign entities and real estate investments. However, the number of principal adverse impact indicators that investors have to disclose has shrunk from 32 to 18, including 14 for corporate issuers.