Novata Expands, Streamlines SFDR Reporting Platform

Novata, an ESG data provider to private markets and investors, has enriched and simplified its Sustainable Finance Disclosure Regulation (SFDR) compliance tools.

The New York-based company said it has made it easier for clients to integrate their SFDR-aligned data with its platform and has created in-platform tools for reporting on the regulation’s Principle Adverse Indicator tests. The service also offers expert guidance and educational resources to clients.

Novata, which was formed in April 2022, said it now has more than 5,300 clients using its data and reporting platform.

Sustainability Reporting Rises Among Russell 1000, S&P 500 Companies

A survey has found a surge in sustainability reporting by large-cap S&P 500 firms and mid-cap Russell 1000 companies.

The survey carried out for corporate sustainability researcher Governance & Accountability Institute (G&A) found that 98 per cent of firms on the S&P 500 – which represent the largest companies on the Russell 1000 – published a sustainability report in 2022 from 96 per cent the year before.

The 2023 Sustainability Reporting in Focus research also found that 90 per cent of mid-caps, which occupy the lower-half of the Russell 1000, had issued such reports, compared with 81 per cent the year before.

Among other findings, alignment with the reporting recommendations of the Taskforce for Climate-related Financial Disclosures (TCFD) climbed to half of all companies on the Russell 1000 and SASB remained the most-widely used sustainability standard among Russell 1000 companies.

GRI and IFRS to Launch ESG Reporting Research Lab

Sustainability reporting standards organisation GRI is to launch a research framework with the IFRS Foundation in which companies can discuss and collaborate on meeting their ESG disclosure obligations.

The Sustainability Innovation Lab (SIL) will be based in Singapore in the heart of Asia where 81 per cent of reporting companies do so in alignment with the GRI, the organisation said. Its own standards are in line with those of the IFRS Foundation, which recently published its first reporting frameworks via the International Sustainability Standards Board (ISSB).

“The goal of the SIL is to support stakeholders and all market participants on their disclosure journeys, guiding them to address disparities in sustainability reporting requirements while supporting the further harmonization of the reporting landscape at the global level,” the GRI said.

The SIL will be launched in Singapore on November 20.

Majority of Asset Managers and Owners Follow TCFD Guides: Report

Most asset managers and owners are reporting their climate performance data in line with the disclosure framework that’s thought most likely to be adopted as a global standard.

The latest annual survey by the Taskforce for Climate-related Financial Disclosures (TCFD) found that 70 per cent of managers and 84 per cent of asset owners reported climate-related data to their stakeholders last year. Of the former, more than four fifths report in line with at least one of the TCFD’s 11 recommended disclosures, while half of asset owners followed the organisation’s guidelines.

The TCFD disclosures with which most asset managers were aligned were those covering the reporting of climate related metrics as well as risks and opportunities. Asset owners placed greater focus on risk management recommendations.

The materiality of climate-related risks to their business was given as the most common reason why both groups reported such data, while asset owners gave equal weight to regulatory requirements.

The annual report highlighted how TCFD has become the go-to reporting framework for financial institutions, a point underlined by the incorporation of its recommendations into the International Sustainability Standards Board’s (ISSB) own set of disclosure guidelines. The ISSB, which was created in 2021, is widely expected to form the backbone of any globally accepted standard on ESG disclosures.

Most Companies Unprepared for SR Disclosure Assurance

A large majority of companies are unprepared to fully comply with the European Union’s Corporate Sustainability Reporting Directive (CSRD) and other imminent sustainability reporting regulations, according to a new survey.

KPMG found that 75 per cent of 750 companies surveyed in its “Road to Readiness: KPMG ESG Assurance Maturity Index 2023” didn’t have the skills, policies or systems to meet the regulations’ disclosures assurance requirements.

The companies that are most ready are the larger firms and those that are already engaged on ESG issues. More than half said it was difficult to balance such demands against profitability expectations of shareholders, the report also found.

HKEX Plans to Widen Climate Disclosure Rules

Hong Kong’s financial regulator has said it will increase requirements for companies to disclose climate-related data as it seeks to better enable investors to direct capital to ESG-linked assets and companies. Hong Kong Exchanges and Clearing (HKEX) chair Laura Cha Shih May-lung said the plans would be introduced in pursuit of helping China reach its 2060 net-zero goals.

EU Considers Rewriting Sustainability Categorisations for Financial Products

The European Commission is reviewing parts of its flagship regulation covering financial institutions’ ESG performance reporting. In a consultation questionnaire on the Sustainable Finance Disclosure Regulation (SFDR) market participants are queried on the way sustainability products are categorised. This follows complains that the designation of products as Article 6, 8 or 9 – indicating increasing degrees of sustainability – is confusing. The consultation also indicates the EC is considering requiring ESG disclosures for all financial products, even those that make no sustainability claims.

Moody’s Analytics Wins Contract to Fight Financial Crime in European Union

Moody’s Analytics has won a framework contract worth up to €34 million from the European Commission to strengthen its anti-fraud, money laundering and financial crime effort. The four-year contract will be managed by the Commission’s European Anti-Fraud Office (OLAF) and will use the Orbis database operated by Bueau van Dijk, a Moody’s Analytics subsidiary, to access company data, information on connected individuals, and risk indicators.

Organisations working with the Orbis data will include the European Court of Auditors, European Banking Authority, European Public Prosecutor’s Office, Europol and up to 30 Directorate Generals of the EC. They will apply the data to form a comprehensive understanding of the increasing threat of fraud and financial crime in the EU.

Europe Adopts Reporting Standards for CSRD Disclosures

The European Commission has given assent to its own set of guidelines for the estimated 50,000 companies that will be required to report their ESG performance data under the Corporate Sustainable Reporting Directive (CSRD). The European Sustainability Reporting Directive considers frameworks established by the International Sustainability Standards Board and GRI and will be applicable when companies first report under CSRD in 2025.

GLEIF Signals Intent to Join Global Project Designed to Digitise ESG Credentials of MSMEs

The Global Legal Entity Identifier Foundation (GLEIF), United Nations Development Programme (UNDP), and Monetary Authority of Singapore (MAS) have signed a statement of intent to embark on a collaborative initiative to develop digital Environmental, Social and Governance (ESG) credentials for micro, small and medium-sized enterprises (MSMEs) worldwide.

The initiative, Project Savannah, hopes to lower the barriers to ESG reporting for MSMEs by establishing a common framework of ESG metrics to generate basic sustainability credentials and commence the journey towards meeting UN Sustainable Development Goals (SDGs). It will use digital initiatives, such as MAS’s Project Greenprint1, to generate ESG data credentials that can be housed in MSMEs’ LEI records. MSMEs will then be able to transmit verified entity information and key ESG data to their business partners.