Swiss financial data expert SIX has made a significant step into the data aggregation space with the signing of a deal that will see it include Sustainalytics content in the company’s ESG offering.
Company data from Sustainalytics, a Morningstar company, will be incorporated into SIX’s regulatory reporting service, particularly the European Union’s Sustainable Finance Disclosure Regulation (SFDR) and Taxonomy. The data sets will comprise mostly that relevant to reporting on the regulation’s Principal Adverse Impacts (PAI), which are a test of the ESG impact of investment decisions. Sustainalytics’ risk ratings and scores will also be available to SIX clients.
The deal is the first of several planned this month, with announcements of tie ups with at least two other major data providers imminent. Janine Hofer-Witter, Senior Product Manager for Financial Information at SIX said the third-party data would provide company-specific ESG insights to complement SIX’s proprietary financial products data.
“The challenge is that there is still a lot of missing data from companies because they don’t necessarily disclose on ESG matters or the disclosures are patchy and may not be comparable,” Hofer-Wittwer told ESG Insight.
“We don’t need to start trying to source all this company data when there are companies that have been doing this for a long time, that have established processes and that have analytical capacities and capabilities.”
Analytical Expertise
SIX has focused its ESG activities on sourcing data from manufacturers of funds and structured products. Hofer-Witter said that SIX’s bank and other financial clients were asking for entity-level data to help with their reporting requirements and investment processes. In response, the company will begin taking in outside data, standardising it and making it machine readable for clients. That will then be fed to clients through the company’s existing data channels.
Hofer-Witter said third-party providers can also offer the sort of analytical know-how to make accurate estimates that will help clients fill gaps in the data record. In return SIX offers its partners access to its global sales and client network, she said.
While the new development is aimed primarily at giving clients the information they need to comply with growing regulatory demands, the same data will also be of use in other processes.
“Risk ratings and scores are, of course, used for investment decisions and even, in my view, the regulatory data also can be used for investment decisions,” she said. “Because that way you can harmonise what you use at the point of your investment decision with what you use at the point of disclosure.”
Global Ambition
Licencing arrangements prevent aggregators from blending multiple data sources. Instead, Hofer-Witter said SIX had constructed its own regulatory reporting template whose data fields can be populated with content from different providers.
“By looking at, and working with the regulations, we have come up with a data structure that’s built on the regulation,” she said, adding that this approach “also makes that data more comparable for our clients.”
SIX’s SFDR and EU Taxonomy service is expected to form the basis of regulatory reporting solutions for other jurisdictions as the laws evolve. The Sustainalytics partnership was announced a day after the Securities and Exchange Commission in the US announced its long-expected decision to force American listed companies to disclose their greenhouse gas emissions.
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