Key terms
Definitions of the key regulatory and product terms used across the Connect Earth Compliance and Reporting product.
Definitions of the core terms you will encounter across the Compliance and Reporting product and its regulatory outputs.
Article 6 / 8 / 9
SFDR fund classifications.
- Article 6 ("grey") — no specific ESG strategy; must disclose how sustainability risks are managed.
- Article 8 ("light green") — promotes environmental or social characteristics; ESG criteria are applied in the investment process.
- Article 9 ("dark green") — sustainable investment is the core objective; all investments must contribute to an environmental or social goal.
AUM (Assets Under Management)
The total market value of all investments managed on behalf of clients. Used as a weighting factor in PAI calculations.
CapEx (Capital Expenditure)
Money spent to acquire or upgrade physical assets. One of the three EU Taxonomy KPIs alongside Turnover and OpEx.
Carbon footprint
A PAI indicator measuring a fund's GHG emissions normalised by its market value, typically expressed per million EUR invested.
DNSH (Do No Significant Harm)
One of the three EU Taxonomy alignment conditions. An economic activity must not significantly harm any of the six environmental objectives.
EET (European ESG Template)
A standardised Excel file developed by FinDatEx for sharing ESG data — including taxonomy alignment percentages, PAI indicators, and SFDR product classification — between fund managers and distributors or financial advisers. Using the EET is voluntary as a format, but the underlying disclosures it contains are required by regulation.
Entity level
One of the two operational modes of the Compliance and Reporting product. Entity level covers regulatory work that aggregates across all of an asset manager's in-scope funds — most notably the annual entity-wide PAI Statement, multi-portfolio stewardship, and entity-wide audit readiness. See also Portfolio level.
FIGI (Financial Instrument Global Identifier)
A unique 12-character identifier for financial instruments, used to map securities.
GAV (Gross Asset Value)
Total market value of all assets before deducting liabilities. Contrast with NAV.
GHG emissions
Greenhouse gas emissions, split across three scopes: Scope 1 (direct emissions), Scope 2 (purchased energy), Scope 3 (value chain). GHG emissions are a mandatory PAI indicator under SFDR.
ISIN (International Securities Identification Number)
A unique identifier for securities. Used in portfolio uploads to identify holdings.
Minimum Safeguards (MS)
One of the three EU Taxonomy alignment conditions. The company must respect the OECD Guidelines for Multinational Enterprises, the UN Guiding Principles on Business and Human Rights, and similar international standards.
Module
A subsection of a product — for example, the PAI module. Compliance and Reporting modules are organised into module groups.
Module group
A grouping of related modules within Compliance and Reporting. The groups with published documentation are Insights, Reporting, and Risk.
NAV (Net Asset Value)
Fund value after deducting liabilities. The standard basis for portfolio weighting in PAI calculations.
Netting
The process of offsetting short positions against long positions for the same counterparty, down to zero (not negative). Net position = sum of longs + sum of shorts per issuer.
OpEx (Operating Expenditure)
Day-to-day running costs of a business. One of the three EU Taxonomy KPIs alongside Turnover and CapEx.
PAI (Principal Adverse Impact)
A standardised ESG indicator measuring the negative effects investments may have on people and the environment. SFDR defines 14 mandatory PAI indicators for investee companies, including GHG emissions, carbon footprint, fossil fuel exposure, board gender diversity, and violations of UN Global Compact principles.
PAI Statement
The annual entity-level disclosure required under SFDR Article 4, describing the negative ESG effects of a firm's investments across all funds. Due by 30 June of the year following the reporting period.
PAI weight
A holding's proportional share of a company's negative ESG impact, based on the fund's normalised portfolio weight in that company.
Periodic Report
The annual fund-level SFDR disclosure required for Article 8 and Article 9 funds, setting out how the fund's sustainability characteristics or objectives were met during the reporting period.
Portfolio level
One of the two operational modes of the Compliance and Reporting product. Portfolio level covers analytics and reporting on an individual portfolio or fund — the Periodic Report, fund-level PAI calculations, taxonomy alignment, temperature score, and other per-portfolio analytics. See also Entity level.
Portfolio snapshot
A point-in-time view of a portfolio's holdings, uploaded to the product to make those holdings available for compliance calculations and reporting. Snapshots are typically taken at standard period-end dates: 31 March (Q1), 30 June (Q2), 30 September (Q3), and 31 December (Q4).
Portfolio weight
The proportion of a fund's total value invested in a particular company, based on market value relative to the total NAV.
SFDR (Sustainable Finance Disclosure Regulation)
The EU regulation requiring financial market participants to disclose how they integrate sustainability into investment decisions. It operates at two levels: entity level (the PAI Statement) and product level (fund classification and the Periodic Report).
Substantial Contribution (SC)
One of the three EU Taxonomy alignment conditions. The economic activity must make a significant contribution to at least one of the six environmental objectives (climate change mitigation, climate change adaptation, water and marine resources, circular economy, pollution prevention, biodiversity).
Sustainable investments method
The definition of "sustainable investment" selected when generating a MiFID II end client report. Determines how the portfolio's sustainable investment share is calculated and displayed — options include SFDR Article 2(17) sustainable investments, EU Taxonomy-aligned investments, or investments considering PAIs.
Taxonomy
Short for "EU Taxonomy for Sustainable Activities" — the EU classification system that defines what counts as environmentally sustainable economic activity. To be taxonomy-aligned, an activity must meet three conditions: Substantial Contribution, DNSH, and Minimum Safeguards.
Taxonomy-eligible means the activity falls within a sector covered by the taxonomy, but has not necessarily been assessed against the alignment criteria. Taxonomy-aligned means it is eligible and meets all three conditions.
Turnover
Total revenue from the sale of goods or services. The primary KPI for taxonomy alignment reporting in fund contexts — when an EET or fund disclosure asks for "the reported share of taxonomy-aligned investments", this refers to the Turnover (revenue) figure.
UNGC (UN Global Compact)
A set of ten principles on human rights, labour, the environment, and anti-corruption that companies can voluntarily commit to. Violations of UNGC principles are a mandatory PAI indicator under SFDR.