What is NACE?
NACE is a standardised way of grouping economic activities in different sectors and industries. The NACE system has a hierarchical structure, consisting of four levels:
- Level 1 – Section level – 21 sections identified by letter A to U
- Level 2 – Division level – 88 divisions identified by a two-digit numerical code from 00 to 99
- Level 3 – Group level – 272 groups identified by a three-digit numerical code from 00.0 to 99.0
- Level 4 – Classes level – 615 classes identified by a four-digit numerical code from 00.00 to 99.00
Here is an example from the classification standard:
Why is the NACE code useful?
By using NACE codes, one can analyse investment exposures towards different industries and sectors. Such analysis requires that NACE codes are registered for all investments, including the underlying investments in any investment funds.
Do you know how exposed you are towards the oil and gas industry? How heavily invested you are in the car industry? These and similar questions can be answered if you have NACE codes registered for your investments.
If you are already including the NACE code in supervisory reporting, why not use it to analyse your industry exposure?
Where do I find the correct NACE code for my investments?
There are several sources for the correct NACE code for issuers of your investments. If you have a subscription with a data provider such as Bloomberg, Refinitive, Factset or similar, they will most likely be able to provide NACE codes.
Here are some links from a selection of vendors that can deliver relevant data for Solvency II and EIOPA reporting: