GUIDE

How to collect, manage and report

your SFDR data
WORLDFAVOR’S STEP-BY-STEP GUIDE TO SFDR COMPLIANCE

www.worldfavor.com
Introduction

The SFDR is an EU regulation that sets out

mandatory ESG disclosure requirements for IN THIS GUIDE, YOU'LL LEARN:
financial market participants active within Our best tips to manage your
the European Union. The legislation's main SFDR data – every step from the
purpose is to make investors more aware of collecting to reporting
the sustainability risks of their investments How to guide and motivate your
and reduce the chances of greenwashing – reporting portfolio companies in
the SFDR reporting jungle
by forcing them to become more
transparent with their ESG data. How to report your findings as
stakeholders want it
However, the biggest challenge in-scope
firms face is the amount and complexity of ... And much more!

data on their portfolio required to become

SFDR compliant. While relying on second-
sourced data or dim estimations might be WHAT'S INSIDE
tempting, the most accurate data you will
Step 1: Set up your data collection
get is when it's obtained directly from the 03 and monitoring process
source, that is, your portfolio companies.
Step 2: Engage and provide value to
04 your portfolio companies
Luckily, there are ways to make collecting Step 3: Structure, calculate and
and reporting your SFDR data smoother. 05 aggregate the data
Step 4: Report and communicate
06
This step-by-step guide will walk you the data in a standardized format
through how to create a process to collect Step 5: Use data and insights for
07 smarter decisions
complete and trustworthy data you can
stand behind for your SFDR reporting. Let's
have a look!

WHO IS THIS GUIDE FOR?

This guide was developed to help fund managers and those responsible for SFDR
disclosure and reporting adverse sustainability indicators – also referred to as PAI
indicators.

These steps can be applied to all investment firms, pension funds, insurance
companies, banks, venture capital funds, or other financial institutions, regardless of
size, number of portfolio companies, or where you are in your SFDR process.

2
 Step 1: Set up your data collection
and monitoring process
The easiest way to start is to streamline the process of collecting, aggregating,
and reporting your PAI indicators* in a dedicated digital sustainability
reporting tool. By choosing a dedicated sustainability tool, instead of for
example, a spreadsheet that is sent out and managed manually, you will
spare your and your portfolio companies’ time and efforts. This way, you also
ensure the integrity and security of the data – now and in the future.

*The PAI indicators are a set of mandatory environmental, social, and

governance indicators and metrics, and in-scope firms are required to report
from June 2023. 18 indicators are mandatory for all firms to report on, and 46
are optional. However, firms must choose at least two optimal to report on.

BENEFITS OF DIGITALIZING YOUR PROCESS

Streamlined processes Unlocks valuable time Provides better insights

Automates the processes while Allows you to minimize Eliminates human errors
helping to organize and analyze time on administrative for quicker and more
your insights. and manual tasks. accurate insights.

HOW WORLDFAVOR CAN HELP

The entire reporting process – from collecting, analyzing, structuring, and

exporting the data – is done automatically in Worldfavor and completely
aligned to the SFDR requirements. Get access to our standardized content,
including calculations of the mandatory PAI indicators. Plus, add calculations
of the additional PAIs to your selection of indicators. We got them all covered
in the platform.

3
Step 2: Engage and provide value to
your portfolio companies

Collecting data from portfolio companies can be tricky as they may not always
see the value of reporting. This is especially true for the SFDR regulation, as it is
directed to investors, not portfolio companies.

Be clear from the beginning about why you are collecting the information, give
your portfolio companies the means and tools to simplify their reporting, and
help them see the value of their reporting.

HOW TO BOOST YOUR RESPONSE RATE

1 2
Clarify Support
Make sure your portfolio Portfolio companies might
companies know why you are not have the information you
collecting the information, request readily available and
how you intend to do it, and might need guidance on how
when. to gain it.

3 4
Drive value Follow up
Encourage your portfolio Reporting under the SFDR is
companies to record and an annual practice. Set up a
share their information by process that makes reporting
creating value for their easy for you and your
reporting efforts. reporting companies.

HOW WORLDFAVOR CAN HELP

Get access and share our pre-defined SFDR questionnaires with your portfolio
companies, which cover all the mandatory KPIs. In addition, all your reporting
companies get their own dashboard in Worldfavor to see their own development
over time and reuse their reported data for other stakeholders, which strongly
incentivizes them to report.

4
Step 3: Structure, calculate and
aggregate the data

Once you’ve collected the PAI indicators for each portfolio company, it needs to
be aggregated at fund level. The calculations that need to be done under the
SFDR disclosure requirements consist of both ratios, such as intensities and
aggregation of the portfolio data based on how much has been invested in
each portfolio company.

HOW TO AGGREGATE THE REPORTED DATA TO PORTFOLIO LEVEL

Collect PAI indicators from Aggregate the

each portfolio company
Support your portfolio
companies in their PAI
calculations and reporting.
Calculate according
to the SFDR disclosure
requirements
Calculate your
portfolio-level data
using the methodology
and formulas outlined
in the SFDR.
responses to fund
level
Structure, categorize
and understand your
portfolio companies'
information at portfolio
level.
Report your findings
Share your portfolio-
level findings on your
webpage.

HOW WORLDFAVOR CAN HELP

The solution automates the structuring and aggregation of the responses from
the portfolio to fund level, and you can view the final result in your dashboard.
Free up your time and let our built-in SFDR equations calculate the results for
you.

5
Step 4: Report and communicate the
data in a standardized format

Complete the reporting by adding

your insights to your website,
publicly available to your
stakeholders. Use common
terminology like the rest of the
industry to make it easier for
consumers and stakeholders to
understand and compare
sustainable financial products.

SFDR REPORTING CHECKLIST

Are you using common terminology like the rest of the industry? This
is crucial to make it easier for consumers and other stakeholders to
understand and compare sustainable financial products.

Is the information provided in a manner that is easily accessible, free

of charge, non-discriminatory, simple, fair, comprehensible,
transparent, and not misleading?

Is the layout of the information formed in a way that is easy to read,

uses characters of readable size, and a style that facilitates its
understanding?

HOW WORLDFAVOR CAN HELP

Easily export all your aggregated data in a standardized format – just as your
stakeholder wants it. Our questionnaires are carefully developed with the
mainstream and internationally accepted terminology for corporate
sustainability and ESG reporting.

6
 Step 5: Use data and insights for
smarter decisions

SFDR is a reporting directive but

also a great way to understand the
performance of your fund. Gain
insights by analyzing reported data
per portfolio company or at an
aggregated level. Identify who is “best
in class” and who needs support, in
general, or per E, S, G aspect.

DISCOVER MORE

What is SFDR, EU’s SFDR: Reporting-Ready SFDR: What is article 6,

sustainable finance Data with Worldfavor 8 & 9?
disclosure regulation? Sustainable Investments
Read more Read more Read more

HOW WORLDFAVOR CAN HELP

Visualize, filter, and compare your data in clear, neat dashboards to pinpoint
where to focus your efforts and make better sustainable decisions. In addition,
by using a collaborative tool, you empower your portfolio companies to track
their own progress over time and accelerate their own ESG journey. After all,
you are only as sustainable as your portfolio companies are.

7
A summary

Collecting and following up on your SFDR data is not an easy task to take upon.
On the one hand, stakeholders expect your SFDR disclosure to be reported in a
standardized, comparable, and consistent format – just like financial reporting.
On the other, you’re expected to provide your portfolio companies with the
necessary guidance to help them navigate new regulatory territory and
measure KPIs they’re not used to tracking.

Digitizing and automating your SFDR data collection saves you time, eliminates
human error, and avoids unnecessary headaches. With Worldfavor, it’s easy to
follow up on the metrics defined in the SFDR regulation. With the help of ready-
to-use SFDR questionnaires, built-in equations that calculate the results for
you, and a dedicated place to do your bespoke data sets (for articles 8 and 9
funds), the platform basically does the work for you!

Book a personal demo to

BOOK A DEMO
see Worldfavor in action

This guide is based on the material

from the collaborative SFDR step-
by-step Worldfavor did together
with Aztec Group. To learn more
about the collaboration, see our
news blog here.

8
 About Worldfavor
Worldfavor’s ESG platform helps investors, supply chains, and corporations to
manage data and drive sustainable change. Our solutions enable companies
to access, share and gain insights from ESG data in one place, empowering
sustainability at scale.

Worldfavor’s platform empowers companies to seamlessly monitor crucial

environmental, social, and governance topics to align with regulations, reduce
emissions, and improve overall transparency and sustainability throughout
their value chain.

We’re on a mission to make sustainable business the mainstream, and today

Worldfavor’s ESG platform connects over 30,000 companies in 140 countries to
make sustainable decisions and create positive impact.

TRUSTED BY 30,000+ ORGANIZATIONS IN 140 COUNTRIES