Clarity AI: One of the five Articles, Article 9 provides little information on exposure to Fossil Fuels

Clarity AI today announced the results of a follow-up analysis of Article 9 funds that invest in companies with strong evidence of violations of the UNGC principles, as well as companies that derive the majority of their revenue from fossil fuels, in November 2022. Today’s analysis tries to find out why “green” funds invest in this way.

The European ESG Model (“EET”) is an industry tool designed to help financial market participants disclose information more easily and contains much of the information related to the Level 2 SFDR models that came into force this month. Its use is and will remain optional for asset managers. However, many fund managers already provide EET.

Clarity AI’s tracking analysis sheds light on three distinct areas:

  • The level of disclosure in EETs remains very low: Only 5% of the sample of 830 Article 9 funds included a value for the data field “Share of investments in companies involved in violations of the UNGC Principles of the OECD Guidelines for Multinational Enterprises” and only 10% of funds indicated. share of their investments exposed to fossil fuels.
  • The completeness of data on violations of UNGC and OECD guidelines is problematic: only 43 Article 9 fund managers detailed in their EETs the funds’ exposure to companies that violate the UNGC Principles or OECD Guidelines. Of these, 42 reported zero exposure; however, data from Clarity AI shows that nearly 60% (25 funds) have invested in at least one company involved in such violations.
  • One in five Article 9 funds underreport their exposure to fossil fuels: When comparing the Clarity AI data to the EETs of the 83 Article 9 funds that disclosed this information, the Clarity AI research team found that 21% of these funds underreported their exposure to fossil fuels. On average, their exposure is 4 percentage points (pp) lower than Clarity AI data, but the discrepancy can be as much as 13 pp.

Patricia Pina, Head of Research and Innovation at Clarity AI: “While EET is still evolving, a lot of information can be gained by analyzing existing presentations. This approach underscores the need for continued clarity on the regulatory requirements of Article 9 funds, while demonstrating the need for a reliable data source to detect violations and identify risks. Clarity AI’s coverage is up to 13 times better than other providers, giving you access to key elements of each fund. »

About Clarity AI

Clarity AI is a sustainability technology platform that uses machine learning and big data to deliver environmental and social insights to investors, organizations and consumers. As of December 2022, the Clarity AI platform analyzes more than 50,000 companies, 360,000 funds, 198 countries and 199 local governments, which is 2-13 times more than any other player in the market, and provides investment, business research, provides data and analysis for comparison. , e-commerce and reporting. Clarity AI has offices in North America, Europe and the Middle East, and its client network manages tens of trillions of assets.

The text of the press release resulting from the translation should not be considered official under any circumstances. The only original version of the press release is the press release in its original language. A translation will always have to be compared to the source text, which will set a precedent.

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