Clarity AI has announced the launch of a new solution targeted at fund managers, portfolio managers, and ESG analysts.

According to Finextra, this innovative tool is designed to simplify the complex landscape of sustainable investment fund regulations and labels in Europe, which are increasingly shaped by stringent regulatory demands and the need to combat greenwashing.

The drive behind this new product stems from the evolving regulatory environment, such as the UK’s FCA Sustainability Disclosure Requirements (SDR) and various government or industry-led labels like France’s SRI and Germany’s FNG. These frameworks aim to enhance transparency and reduce the risk of greenwashing in sustainable investments.

What Clarity AI does is crucial in a market where sustainability is paramount. The company specializes in providing technology solutions that help fund managers navigate and comply with diverse ESG metrics and frameworks unique to each market.

The product itself brings all necessary compliance information into one user-friendly platform, helping users monitor their funds against complex metrics and quickly identify any areas of non-compliance. This allows for more efficient investment decisions and better compliance management.

Additional features of Clarity AI’s solution include adaptive technology that updates in line with market changes and new regulations. This is particularly relevant given recent guidelines from the European Securities and Markets Authority (ESMA) that require funds with ESG-related terms in their names to invest at least 80% of their assets sustainably.

Further developments announced include support for new sustainability labels such as the French SRI label and the Belgian Towards Sustainability label, along with screening for the Paris-Aligned Benchmark (PAB) and Climate Transition Benchmark (CTB) exclusions under ESMA Naming Rules.

“The goal is to reduce the amount of time fund managers spend on identifying potential investments that fall short of the standards, and understanding the cause for non-compliance, in order to decide on the best course of action,” Henry Waind, product lead at Clarity AI, said.

“Sustainability regulations and labels are proliferating, making it increasingly challenging for fund managers to keep up,” added Tom Willman, regulatory lead at Clarity AI. “A significant amount of resources is tied up in regulatory obligations. These could be better used to develop sustainable solutions that support end-investors’ sustainability goals, and technology is key to making this process more efficient.”