By Dr Matthias Breier, Head of ESG Product, FE fundinfo
The importance of ESG data in the financial industry has become increasingly high in recent years. This is strongly driven by global standards like TCFD, TNFD, or regulations like the European Union’s Sustainable Financial Disclosure Regulation, or the Sustainability Disclosure Requirements in the UK.
Switzerland and its financial market have implemented the Swiss Climate Scores as it looks to transition to net-zero greenhouse gas emissions by 2050. This is needed to honour its obligations under the Paris Agreement of holding the increase in the global temperature to well below 2°C and pursuing efforts to limit it to 1.5°C. These documents are a new way of making climate data transparently available and are closely aligned with international standards like TCFD.
It means that, on the one side, any asset manager who distributes in Switzerland is expected to complete a Swiss Climate Scores report for their fund. However, on the other side, Swiss asset owners like Swiss pension funds are also expected to calculate a Swiss Climate Scores report for their portfolios. In addition to the requirement to complete the reports, these fund reports are then expected to be made available and used with clients.
The finance industry – namely asset and fund managers, banks, wealth managers, distributors and asset owners – therefore, need to find a solution to report on the Swiss Climate Scores over the coming months. The requirements for successful reporting are huge and not easy to address. Moreover, based on the amount of funds and portfolios available, the complexity and budget for tasks like these vary a lot.
Partnership to create best in class Swiss Climate Scores solutions for clients
In response to this, FE fundinfo and ISS ESG decided to partner-up to provide “best-in-class” solutions to clients that plan to report on the Swiss Climate Scores. The partnership brings together the high quality ESG data of ISS ESG with the flexible and scalable reporting solution of FE fundinfo. Despite this partnership, clients of both companies can pursue their own solutions. This means ISS ESG data clients can still work with other reporting providers or do the reporting themselves, and FE fundinfo clients can also work with the data of other providers to fulfil their Swiss Climate Scores reporting expectations.
For interested parties this means that the whole data transmission and methodology implementation is directly managed between ISS ESG and FE fundinfo respectively. Therefore, clients can fully focus on their main tasks, rather than dealing with any reporting requirements.
Attractive solution for asset owners yearly reporting
The created solutions are tied to client specific reporting requirements and the corresponding budgets. While fund reporting will be expected monthly, we partnered up to support asset owners with a pay-on-demand reporting solution that can be triggered once a year. This solution allows asset owners to get a yearly report, based on high quality data that can be made publicly available to investors and other stakeholders.
The report is an objective third-party assessment that can bring together one analysis for the overall mandate instead of having different underlying providers. Asset owner clients under this reporting solution will not require their own ISS ESG data license. The costs for the underlying used data are directly exchanged between FE fundinfo and ISS ESG, so that the client can fully focus on managing the best possible pension fund.
Monthly reporting made easy
Other stakeholders will have requirements for more regular reports and reports in their own corporate design. For example, asset managers that have a licence with both, ISS ESG and FE fundinfo, will get fully automated monthly fund reports to meet their needs. ISS ESG and FE fundinfo integrate the data flows directly with each other which avoids the need for the client to touch the data; freeing up their time which can be spent elsewhere in the core business tasks.
This solution combines the full needs to cover the requirements of the Swiss Climate Scores and combines them even further by supporting the required PDF metadata for full distribution to wealth managers and the delivery of the Swiss Climate Score openfunds data standard for national and international data communication as an industry standard.
Best practice Swiss Climate Score solution for every market participant
With these two different services in mind, the overall proposition of ISS ESG and FE fundinfo has created a best practice solution for market participants of every size that is available in multi-language versions. Without a lot of extra effort all required stakeholders can achieve the expected transparency and create their multi language versions of the Swiss Climate Scores.