The new seismic triggering principle requires that all investments under $ Fox each year have to be reviewed and approved by the sfdr mandatory indicators financial director responsible. Following approval, the investments will be subject to a new set of KPIs (Key Performance Indicators) that shows future performance of sustainability.
This is requiring companies to review and comply with a very tough and fairly new set of reporting requirements, the main benefit being that all sfdr mandatory indicators financial facilities must be structured to include these measures, and to reject investments that don't comply.
In order to comply with the new standard these companies have historically been assigning KPIs to each project and then plugging them into the project portfolio, however for each project - a large number of new KPIs have been introduced with much of them being industry specific predictors of sustainability performance.
The horizons have clearly been expanded as well, with KPIs under the EU itself reporting to individuals all over the EU. Now the data from the individual sfdr mandatory indicators clients has to be captured and brought together. This took some adjusting of the data structure to bring it out to the client specific consumption levels even more onerous.
It was hailed rightly by the Financial Times that the use of KPIs has been a significant boon to financial advisors and their clients. This can explain aspects of the new standard that have been highlighted by research from encryption, investment banking and power industry companies showing that 90% of leading firms in key sectors are already using sfdr mandatory indicators. This inevitably is a much more significant factor in the process and also is likely to make it significantly far more tough for Fund Managers to comply, possibly pushing them to seek better funding, which is more bad news for shareholders.
The salary of two top managing directors at a major US energy firm told the story well. The firm's lead MD pointed out that the industry was already developing tools to assist advisors to use the new system, for those who were already actively using the Pension Investment Advice Code (PIC), which he sponsored at the time.
So, there we have two new KPIs, which are not considered industry specific or even industry approved, but are nevertheless incredibly valuable for the Financial Advisor, as they can measure the portfolio performance of each investment under review.
The other big factor is that the firm should definitely have at least one compliance officer with a profound and varied role in exactly what the firm is doing, and where. These new sfdr mandatory indicators rules require that all firms must have at least a single compliance officer.
Robert Barner, Partner at Barnerasser, and former CFO and Chairman of PSG Investments has published a guide for firms interested in monitoring financial informative services for more detail.
One thing is clear - the adoption of a suicide tactic is becoming increasingly difficult. It is critical that firms take a long hard look at the benefits of the sfdr mandatory indicators revision and adapt the approach to comply with it.