Business Situation
In response to the evolving EU regulatory landscape, the client, a global environmental, social, and governance (ESG) ratings and analytics powerhouse, sought to develop a cutting-edge, EU Taxonomy-aligned product for financial and non-financial market participants.
The goal was to assist asset managers, institutional investors, and corporates in accurately assessing the eligibility and alignment of economic activities across investments, revenue, and expenditure, in accordance with EU Taxonomy and Article 8 requirements.
SG Analytics (SGA) was chosen as the strategic partner to provide an end-to-end, intelligent ESG data solution, blending deep regulatory understanding, sectoral ESG expertise, and intelligent data automation.
SGA Approach
1. Strategic Onboarding & Regulatory Interpretation
- Engaged in multi-round consultations with the client to understand the product vision, taxonomy use cases, and target client segments
- Interpreted the EU Taxonomy framework, referencing the European Commission’s Delegated Acts, TEG reports, and EU Taxonomy Compass
2. Sector-Centric Activity Classification
- Conducted a deep-dive activity assessment across high-impact sectors:
- Construction & real estate
- Energy & utilities
- Manufacturing, BFSI, and transport
- Mapped sector-wise activities as eligible, aligned, transitional, or enabling under the Climate Delegated Act
3. Technical Screening & KPI Framework Development
- Developed a repository of relevant key performance indicators (KPIs) for both financial and non-financial entities, aligning with:
- Substantial Contribution Criteria (climate mitigation/adaptation)
- Do No Significant Harm (DNSH) provisions
- Minimum Safeguards Screening (MSS)
- Evaluated numerators and denominators for each KPI to ensure alignment with Article 8’s disclosure format
4. Technology-Assisted Research & Data Aggregation
- Utilized a hybrid model by integrating:
- Artificial intelligence (AI)-enhanced data tagging for taxonomy-aligned disclosures
- Sector SMEs for nuanced interpretation of ambiguous or unstructured company data
- Built customized data collection templates, SOPs, and sector-specific KPI guidance documents to ensure consistent delivery across companies
5. Assurance, Quality & Iterative Refinement
- Identified taxonomy-reported data that had third-party verification/assurance
- Integrated findings from initial data sweeps into template refinements and long-term data governance strategies
- Created a repeatable process for ongoing assessment, expansion, and regulatory updates
Key Takeaways
Built a Taxonomy Intelligence Framework: Structured taxonomy evaluation and disclosure system, integrating technical criteria, KPIs, and sectoral context
Human + Machine Synergy: Combined AI tagging tools with domain-driven ESG research, ensuring accuracy, speed, and interpretability
Regulatory Agility: Embedded flexibility to accommodate real-time regulatory changes, ensuring future-proof compliance support
Institutional Impact: Enabled one of the world’s most trusted ESG rating agencies to provide clear, credible, and compliant data to its customers and regulators
