In response to increasingly stringent European regulations, asset managers must adjust their ESG reporting strategies. The European ESG Template (EET) is a report that Asset Servicers send to Asset Managers and distributors, or that Asset Managers send to distributors.
Although the EET is not a regulatory requirement per se, producing this file has become a central element in product distribution strategy. In fact, the visibility of financial products can be significantly impacted by this document, as many distributors now require this new format. Without it, products risk being excluded from the market offering. The EET complements the SFDR, which has become a key tool to ensure greater transparency and meet investor expectations. So how can asset managers adopt it effectively?
A Strengthened Regulatory Framework for Greater Transparency
Responsible investing is becoming a standard, driven by increasingly strict regulations. The Sustainable Finance Disclosure Regulation (SFDR), in force since 2021, requires asset managers to classify their funds based on their ESG integration (Articles 6, 8, or 9).
However, to ensure clear and standardized ESG information sharing, a more structured framework was needed. That’s where the European ESG Template (EET) comes into play. Developed by FinDatEx, this template harmonizes data sharing between asset managers, distributors, and investors, providing better transparency on the ESG commitments of financial products.
EET and SFDR: Complementary Tools for Structuring ESG Reporting
The EET does not replace the SFDR—it complements it by structuring the transmission of ESG information required by the regulation. While the SFDR defines classification obligations and data disclosure, the EET provides a standardized format allowing asset managers to share this information with distributors and institutional investors.
One of the main challenges lies in aligning data across both frameworks. A fund classified under Article 9 according to the SFDR must not only demonstrate its ESG commitments but also report specific sustainability indicators. The EET facilitates this by including fields aligned with SFDR criteria—such as carbon footprint, controversies, or alignment with the EU taxonomy.
Challenges for Asset Managers and Best Practices
While the EET offers a solution for improving transparency, its adoption requires asset managers to upgrade their internal processes. Several challenges arise:
- Data collection and quality: Ensuring the reliability of ESG information remains a major issue, requiring robust data sources and clear methodologies.
- Reporting harmonization: Maintaining consistency across SFDR disclosures, the EET, and other frameworks like the EU Green Taxonomy.
- Technological adaptation: Integrating the EET into existing reporting tools and automating the collection of ESG indicators to reduce error risk and administrative burden.
To meet these challenges, asset managers must strengthen collaboration with data providers, invest in suitable technological solutions, and train their teams on the ever-evolving regulatory requirements.
Towards More Transparent and Responsible Finance
The adoption of the EET by asset managers marks a key step toward more transparent and better-regulated finance. By structuring ESG data and aligning their reporting with SFDR requirements, they enhance investor trust and facilitate the distribution of their funds across Europe.
Beyond fund classification, another major challenge is the effective integration of Principal Adverse Impacts (PAIs). Although already included within the SFDR framework and reflected in the EET, operationalizing these impacts remains a significant hurdle. Asset managers must not only measure but also disclose the negative impact of their investments on specific environmental and social indicators—an essential requirement for truly effective sustainable finance.
