How Investment Firms Track ESG Data for CSRD

Investment firms and insurance intermediaries play a crucial role in the EU’s transition to a sustainable economy. Under the Corporate Sustainability Reporting Directive (CSRD), these actors must not only disclose their own environmental and social impacts but also track the sustainability performance of the companies and products they finance, invest in, or distribute.

This guide explains how financial advisors, asset managers, and insurance brokers — particularly SMEs — can collect, manage, and report ESG (Environmental, Social, and Governance) data to meet CSRD and Voluntary Sustainability Reporting Standard for SMEs (VSME) expectations. For complementary guidance, see the CSRD guide for financial advisors and brokers and whether financial SMEs need to report financed emissions.

1. Why ESG Data Matters for Financial Firms

Financial services act as the link between capital and sustainability outcomes. The CSRD strengthens this link by requiring reliable, comparable ESG data across the investment chain.

Investment and insurance firms depend on ESG information to:

• Assess climate and social risks in portfolios and client products.
• Comply with EU sustainable finance regulations (CSRD, SFDR, EU Taxonomy).
• Demonstrate responsible investment and underwriting practices.
• Meet client and investor demands for transparency.

Under Recital 27 of the CSRD Directive, credit institutions and insurance undertakings are recognised as having significant sustainability impacts through their lending, investment and underwriting activities.

2. ESG Data Under CSRD and VSME

2.1 CSRD Requirements for Investment Firms

Firms within CSRD scope must report:

• Sustainability impacts, risks, and opportunities (the “double materiality” principle).
• ESG metrics aligned with ESRS standards, including climate (E1), workforce (S1), and governance (G1).
• Financed or insured emissions if material to the firm’s business model.

These requirements apply to:

• Large financial institutions; and
• Listed investment SMEs from 2027 (for FY2026).

2.2 Voluntary Reporting for Smaller Firms

Most independent asset managers and brokers fall below the CSRD thresholds. They can use the VSME Standard (EFRAG 2024) to report proportionately, focusing on:

• B3 – Energy and GHG emissions for own operations.
• B10 – Workforce pay and training.
• B11 – Governance and anti-corruption.
• Optional C1–C4 disclosures for investment-related sustainability topics.

This voluntary route helps SMEs align with CSRD expectations without heavy data burdens.

3. What ESG Data to Track

Investment firms typically manage three ESG data streams:

For SMEs, the focus should be on data that is material and collectable — such as energy use, ESG-labeled fund exposure, and key workforce metrics.

4. Tracking ESG Data in Practice

4.1 Build a Simple Data Map

Identify which ESG data points are already collected for:

• SFDR disclosures (sustainable finance products).
• EU Taxonomy alignment (investment classification).
• MiFID II suitability assessments (client ESG preferences).

This avoids duplication and ensures consistency across frameworks.

4.2 Use Existing Systems

Most investment and insurance firms already maintain:

• CRM systems for client and product data.
• Risk management platforms for exposure metrics.
• Compliance registers for governance reporting.

Integrate ESG fields into these systems — e.g. adding carbon intensity per fund or client ESG ratings.

4.3 Standardise Data Sources

For investment products and portfolios, source ESG data from:

• Public corporate sustainability reports (CSRD-aligned).
• Third-party data providers (Morningstar, MSCI, Sustainalytics).
• Client questionnaires using VSME-aligned templates.

Tip: Under VSME Guidance (§8–15), SMEs are encouraged to collect “faithful, comparable and verifiable” data — even if simplified or estimated.

4.4 Monitor Data Quality

Ensure data is:

• Up to date: Annual refresh cycle matching financial reporting.
• Consistent: Same metrics across funds or client groups.
• Traceable: Each figure linked to a documented source.

Small firms can maintain a simple ESG register — a spreadsheet tracking sources, dates, and assumptions.

5. Portfolio-Level ESG Measurement

Large firms quantify portfolio emissions using methodologies such as:

• PCAF (Partnership for Carbon Accounting Financials) for financed emissions.
• TCFD-aligned risk assessment for climate scenarios.

For SMEs, proportional approaches are acceptable:

• Use qualitative scoring (e.g., % of sustainable or excluded assets).
• Disclose policies rather than complex calculations.
• Note data gaps transparently (“Financed emissions data unavailable for FY2025; firm collecting Scope 1–2 data from investee companies”).

6. Insurance Sector: Tracking ESG in Underwriting

Insurance brokers and underwriters can adapt the same framework:

• Map high-emission client sectors (construction, transport, manufacturing).
• Record environmental risk criteria used in underwriting decisions.
• Track ESG-linked products (e.g. green insurance).

Under CSRD and ESRS E1, insurers must show how they assess environmental risks in underwriting portfolios — even small brokers can describe their approach in narrative form.

7. Reporting and Communication

Internal Reporting

Create a one-page ESG dashboard each quarter summarising:

• Energy and travel data
• Workforce metrics
• ESG exposure of investment or insurance portfolios

External Reporting

• Large firms: include ESG metrics in management reports under ESRS.
• SMEs: publish a VSME sustainability statement on their website or share privately with banks and institutional clients.

Example: “The firm monitors ESG exposure across all client portfolios. Approximately 45% of advised assets are in ESG-labeled funds. Financed emissions not yet quantified; data collection in progress.”

8. Quick Wins for SMEs

Key Terms

• CSRD: Corporate Sustainability Reporting Directive (Directive (EU) 2022/2464).
• ESG Data: Information on environmental, social, and governance performance.
• ESRS: European Sustainability Reporting Standards for CSRD-compliant firms.
• VSME: Voluntary Sustainability Reporting Standard for non-listed SMEs.
• SFDR: Sustainable Finance Disclosure Regulation.
• EU Taxonomy: EU framework classifying sustainable activities.
• Financed Emissions: Scope 3 GHG emissions linked to investments or underwriting.
• Double Materiality: Considering both financial and environmental/social impacts.

To help organise your ESG data collection process, use our checklist generator to create a customised checklist tailored to investment firms:

This tool will help you identify all the ESG data points you need to track and organise them into a structured checklist that aligns with CSRD and VSME requirements.