Introducing the Updated European ESG Template (“EET”) 1.1.2

17th January 2024

Understanding the EET

The European ESG Template (“EET”) is not a compulsory reporting tool, but it plays a crucial role in the European financial industry. Developed by FinDatEx, a technical working group, the EET serves as a standardized format for sharing ESG data. While it aligns with the Sustainable Finance Disclosure Regulation (“SFDR”) and related acts, its main purpose is to facilitate the communication of ESG characteristics by funds, especially to distributors. This exchange of ESG data is helpful in assessing compliance with the SFDR and other European Financial Market Regulations, ensuring consistency in ESG data across various platforms and aiding in the sustainability assessment of funds. The EET encompasses different reporting levels based on SFDR articles (Article 6, 8, and 9).

Impact and Scope of EET

The EET particularly impacts financial market entities under Article 2 of Regulation (EU) 2019/2088. Although not a regulatory requirement, the EET is necessary for all products marketed in the European Union, aiding distributors in identifying sustainable investment options. This encompasses funds classified under Articles 6, 8, and 9 as per SFDR Level 1 and the Regulatory Technical Standards (“RTS”). It’s important to note that the EET disclosure requirements vary depending on the ESG traits of each financial product.

Who Uses the EET?

The primary users of the EET include Product Manufacturers, Fund Distributors, and Financial Advisers. These entities need the EET for SFDR reporting and to align fund selections with sustainable preferences under the Insurance Distribution Directive (“IDD”) and the Markets in Financial Instruments Directive (“MiFID”).

Recent Updates to the EET

The EET template has evolved from version 1.1.1 to 1.1.2, reflecting ongoing changes in the industry and aiming to enhance its clarity and usability. As of 20 December 2023, FinDatEx released the 1.1.2 version. This update, while not extensive, introduces key changes essential for consistency and reporting.

These include typographical corrections, a change in the Transitional Scope Fields from “Mandatory/Conditional” to “Optional,” and the introduction of new data fields like “30000_PAI_Snapshot_Frequency” and “70010_Financial_Instrument_Total_Fund_NAV_Or_Notional.”

More significant amendments have been postponed to a future date.

Implementation Timeline

The latest EET template, version 1.1.2, is available since 31 December 2023 and will be mandatory for Entity Level Reporting by March 2024.

Assistance and Contact Information

Our team is well-equipped to assist clients with the production, validation, and dissemination of the EET, offering expertise and support to navigate these reporting requirements with clarity and precision.

Reach out to us at [email protected] for more information.

Download a copy of our EET guide here

Author

Kwame Taylor