OpenIM The Open Investment Model

SD-10.9 — ESG & Sustainability Compliance

Business Domain: BD-10 Investment Compliance & Guideline Monitoring (Middle office) · Applies: BOTH

Purpose

Runs the product-level sustainability-compliance discipline — the second-line capability that maps a portfolio against the SFDR / Taxonomy article classifications, enforces ESG mandate constraints, gates periodic sustainability disclosure packs against the underlying data, and monitors the stewardship-code obligations the firm’s voting and engagement record must meet. SD-10.9 is the BD-10 sibling of SD-10.3 Regulatory Investment Compliance — it carries the sustainability regulatory and contractual rule set as a distinct compliance capability, because the rule set (SFDR Article 6 / 8 / 9 classification, the Principal Adverse Impact regime, EU Taxonomy alignment, the UK Stewardship Code, US SEC ESG-disclosure rules) is a coherent body distinct from the securities-regulation rule set SD-10.3 owns and the conventional mandate-constraint rule set SD-10.1 / SD-10.2 carry.

It is not SD-13.9 ESG & Sustainability Data — SD-13.9 sources and manages the ESG, sustainability and emissions data (the multi-provider ESG measurement set, the climate data); SD-10.9 runs the compliance rules against that data. It is also not SD-07.8 Climate Risk Analytics — SD-07.8 measures the portfolio’s climate exposure as an investment risk against appetite; SD-10.9 enforces the mandated and regulated ESG and sustainability rules against the portfolio. SD-13.9 supplies the data; SD-07.8 measures the risk in it; SD-10.9 enforces the rules over it.

Service Operations

  • Map portfolio against SFDR / Taxonomy article classifications — classify funds against SFDR Article 6 / 8 / 9 status, compute Principal Adverse Impact (PAI) indicators per the regime’s quantitative templates, and assess EU Taxonomy alignment percentage against the binding criteria.
  • Monitor ESG mandate compliance — enforce client-mandated ESG screens, exclusions and tilts (the negative-screening exclusion list, the tilt-target adherence, the impact-mandate restrictions), and run the restriction-list enforcement on the ESG screening axis as a parallel to SD-10.4 / SD-10.6.
  • Run product-level ESG disclosure controls — gate the periodic SFDR / Taxonomy disclosure pack and equivalent jurisdictional disclosures against the underlying ESG data (E-21) and the binding rules, surfacing breach / gap conditions before the disclosure is filed.
  • Stewardship-compliance enforcement — monitor the firm’s stewardship-code disclosure obligations (the UK Stewardship Code, equivalent codes elsewhere) and verify that the proxy-vote and engagement records (PB-11, engagement document metadata) meet the disclosed policy and the code’s reporting expectations.
  • Manage ESG-compliance breach response — raise alerts on detected ESG breaches and hand off to SD-10.8 Compliance Breach Management & Remediation for the breach lifecycle; assess any disclosure obligation the breach triggers under the sustainability regime.

Inputs and outputs

  • Inputs: E-21 ESG Measurement from SD-13.9 (the underlying provider-by-provider ESG and emissions data); PB-11 Proxy Vote from SD-12.12 (the voting record stewardship-code compliance runs against); E-16 Risk Limit with limit_type = esg (the coded ESG-mandate restrictions); E-03 Portfolio / Mandate (the mandate’s ESG framing); E-22 Metric Definition (governed ESG-metric definitions); the SFDR / Taxonomy / Stewardship-Code rule definitions held in the SD-10.2 coded rule library.
  • Outputs: ESG-compliance check results, breach alerts (consumed by SD-10.8), gated disclosure packs (consumed by SD-16.3 Regulatory Reporting & Filings and SD-16.5 Sustainability & Stewardship Governance), and the audit-trail evidence of the sustainability-compliance check.

Entities

  • Consumes: E-21 ESG Measurement (SD-13.9), PB-11 Proxy Vote (SD-12.12), E-16 Risk Limit (limit_type = esg), E-03 Portfolio / Mandate, E-22 Metric Definition, E-15 Document Metadata (the stewardship-engagement document record), E-01 Legal Entity (the issuer / counterparty being screened).
  • Owns: E-37 ESG Compliance Result — the stored point-in-time ESG-compliance result: SFDR Article 6 / 8 / 9 classification, EU Taxonomy alignment percentage, PAI indicators against the SFDR RTS templates, mandate ESG-screen pass / fail. Append-only, methodology-versioned (every result names the E-22 Metric Definition version in force) — the SFDR / Taxonomy audit trail that answers “what ESG-compliance position did we disclose, on what date, on what methodology” from a stored record. The parallel to E-20 Performance Result and E-19 Risk Measurement. The breach record itself remains owned by SD-10.8 as a process artefact; SD-10.9 owns the compliance result, SD-10.8 owns the breach lifecycle.

Standards

  • SFDR (Regulation (EU) 2019/2088) — the Sustainable Finance Disclosure Regulation: Article 6 (general), Article 8 (light-green) and Article 9 (dark-green) product classification; the Principal Adverse Impact (PAI) indicator set under the Regulatory Technical Standards.
  • EU Taxonomy Regulation (Regulation (EU) 2020/852) — the alignment criteria for environmentally sustainable economic activity; the substantial-contribution and do-no-significant-harm tests.
  • The UK Stewardship Code (2020) — the principles, the reporting expectations, the signatory regime.
  • US SEC ESG-disclosure rules — the Marketing Rule’s substantive application to ESG claims, the proposed and adopted SEC ESG-disclosure regime as it evolves; the Names Rule treatment of ESG-themed funds.
  • CSRD (Directive (EU) 2022/2464) and ISSB IFRS S1 / S2 — the entity-level sustainability disclosure regimes whose product-level inputs SD-10.9 gates; the firm-level entity disclosure itself sits in SD-16.5.
  • The PRI Reporting Framework and the related stewardship-code variants in major jurisdictions.

Open extensions

  • The boundary with SD-07.8 Climate Risk Analytics made fully explicit at the Service-Operation contract level — climate-risk measurement against appetite (SD-07.8) versus enforcement of the sustainability-regulatory rule set (SD-10.9).
  • The disclosure-gate sub-model — the precise check set the SFDR / Taxonomy disclosure pack is gated against, and the routing to SD-16.3 / SD-16.5.
  • The stewardship-engagement document-record contract — the structured record the engagement-side stewardship compliance is verified against.

Built from open-investment-model v0.3.0 · f7452ad