Business Situation
As a proactive participant in sustainable finance and regulatory alignment, the client—an industry leader in investment and asset management—sought to ensure full compliance with the EU Taxonomy Regulation and the Non-Financial Reporting Directive (NFRD).
The objective:
- Assess and disclose the taxonomy eligibility, alignment, enabling, and transitional activities across its diversified investment portfolio of over 8,000 companies.
- Align reporting with the six environmental objectives defined by the EU Taxonomy.
- Enable ongoing compliance monitoring, accommodate weekly portfolio updates, and maintain accuracy across historical data sets.
SG Analytics (SGA) was selected as the strategic environmental, social, and governance (ESG) intelligence partner to architect and deliver a scalable, high-accuracy, and dynamic ESG data solution.
SGA Approach
1. Strategic Onboarding & Requirements Mapping
- Conducted workshops with the client’s ESG, legal, and risk teams to map out expectations across reporting cycles and regulatory milestones
- Fully understood the client’s Article 8-linked disclosures, portfolio evaluation strategies, and taxonomy interpretation models
2. Universe-Wide Research Coverage
- Conducted taxonomy eligibility and alignment assessment for over 8,000 companies across key sectors:
– Construction & real estate
– Energy & utilities
– Manufacturing
– Financial services
– Transportation & infrastructure
3. Human-Centric Expert Team
- Deployed a 20-member cross-functional SME team proficient in ESG regulations, EU policy, and sectoral activity classification
- Designed a multi-tier data validation framework to ensure consistency, reduce manual errors, and enhance audit-readiness
4. Technology Integration & Data Automation
- Leveraged artificial intelligence (AI)-assisted document parsing tools to extract taxonomy disclosures from:
– Annual reports
– Sustainability reports
– Integrated filings
– Regulatory databases & corporate websites - Implemented a dynamic data update mechanism to sync weekly with portfolio additions or deletions
- Built customized templates, standard operating procedures (SOPs), and key performance indicator (KPI) dictionaries aligned to Article 8 annexures for seamless taxonomy classification
5. KPI-Led Taxonomy Classification
- Developed a robust framework of over 30 taxonomy KPIs, covering CapEx, OpEx, turnover, and revenue mapped against:
– Eligible vs. aligned activities
– Transitional and enabling activities
– Six EU environmental objectives (e.g., climate mitigation, circular economy, and water resource management)
6. Historical Data Reconciliation
- Revisited previous-year disclosures to compare taxonomy signals and identify significant changes, ensuring longitudinal consistency in reporting
Applied logic checks to prevent double-counting of Green Bond-related CapEx, in line with EU standards
Key Takeaways
Domain expertise Precision Meets Tech-Powered Speed
A combined force of domain SME expertise and intelligent automation delivered fast, accurate, and regulation-ready ESG insights at scale with 99% quality.
Enabling Real-Time Taxonomy Monitoring
The platform supported live integration with weekly portfolio updates, offering the client an edge in dynamic disclosure environments.
Future-Proofed Reporting Architecture
With robust data systems, sectoral classification logic, and templates in place, the client is now positioned to seamlessly manage future EU Taxonomy and SFDR evolutions.
Strategic ESG Risk Management
Through taxonomy-based transparency, the client improved investor confidence, strengthened compliance frameworks, and ensured their portfolio’s alignment with a climate-conscious investment narrative.
