Moody's rolls out ESG screening tool amid widening compliance obligations Leave a comment


  • Moody's ESG solutions arm launches a tool to help firms comply with EU taxonomy regulation.
  • The demand comes in response to recent mandates that corporations disclose nonfinancial ESG performance metrics.
  • Insider Intelligence publishes hundreds of insights, charts, and forecasts on the Fintech industry. Learn more about becoming a client.

The ESG solutions arm of data and analytics giant Moody's launched a tool that helps investment firms comply with the European Union's (EU) taxonomy regulation, per Business Wire.

Chart showing the personal concerns of Gen Z

The EU taxonomy came into force in July last year and aims to help the EU meet climate and energy targets for 2030 and the objectives of the European Green Deal by creating a common definition of "sustainable."

The EU taxonomy directs investments toward sustainable businesses by classifying economic activities that are deemed environmentally friendly.

Moody's solution will help market participants navigate the regulation by screening companies and activities against the requirements.

Large players like Moody's developing environmental, social, and governance (ESG) compliance solutions that investment managers can plug and play will be in high demand, given the splurge of related regulations-but smaller fintechs also have a golden opportunity to scale with innovative tools.

In response to allegations of rampant greenwashing, the EU widened its ESG regulatory regime, mandating that corporations disclose nonfinancial ESG performance metrics and making financial market participants disclose sustainability metrics like greenhouse gas emissions.

And with the SEC expected to follow suit imminently, meeting the new regulatory requirements will be a leading priority for investment managers over the next year.

The shift to passive investment strategies is shrinking margins. Rising demand for ESG investing represents one of the few remaining pockets of growth for investment managers, who can charge higher fees for this more nascent strategy.

Fintechs can provide solutions and data to help US investment managers navigate the expanding regulatory requirements and scoop up a slice of the $20 trillion in global AUM that will be created by 2025.

We expect large data providers like Refinitiv to grab the majority of the new business. But smaller fintechs can also tailor solutions to the new regulatory developments.

Want to read more stories like this one? Here's how you can gain access:

  1. Join other Insider Intelligence clients who receive Fintech forecasts, briefings, charts, and research reports to their inboxes each day. >> Become a Client
  2. Explore related topics more in depth. >> Browse Our Coverage
  3. Current subscribers can access the entire Insider Intelligence content archive here.

Read the original article on Business Insider



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *