Clarity AI, the leading sustainability technology platform, has launched a groundbreaking Sustainable Investment index and ETF methodology, which aligns with the Sustainable Finance Disclosure Regulation (SFDR).
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The methodology marks a significant step forward for index and ETF providers to build, define and/or market products that fall within the European Union’s definition of Sustainable Investment, outlined in Article 2(17) of the SFDR.
Clarity AI’s methodology is being used in indices that target companies at the forefront of key innovative industries — such as electric vehicles and sustainable infrastructure — and ETFs based on those indices. It can also be applied to broader market indices and funds where investors want to integrate sustainable objectives. It provides a transparent, clear, comprehensive, and robust framework for classifying organizations, funds, and indices as sustainable investments, ensuring greater confidence for investors who seek to align their portfolios with sustainable principles.
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Importantly, as the regulation requires financial market participants to determine what is considered a sustainable investment, Clarity AI’s methodology is customizable. Financial market participants can utilize this methodology to determine how companies pass the sustainable investment assessment, including setting thresholds on UN Sustainable Development Goals (SDGs) and EU Taxonomy contribution, and SFDR Principle Adverse Impact indicators (PAIs), among other criteria, all within the ranges of what is accepted by the regulation.
Ani Widham, Senior Product Manager at Clarity AI commented, “The successful implementation of Clarity AI’s Sustainable Investment methodology into Indices and ETFs sets a precedent for sustainable investing that can shape the future of the financial markets. We know that investors seek clarity and transparency when evaluating their portfolios, so providing them with this efficient methodology, aligned with the SFDR regulation, will enable them to make better sustainable investment decisions to benefit their companies and the wider sustainable investment industry.”
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