PHILADELPHIA, PA (June 2, 2021) –
A new white paper commissioned by the RMA Financial Technology and Automation Committee (FTAC) and authored by State Street Associates (SSA) proposes several best practices to help agent lenders and asset owners align on the evolving ESG and securities lending landscape.
Building upon existing frameworks, “Integrating ESG Considerations into Securities Lending” provides an academic view of the ESG data landscape to propose best practices on which asset owners and agent lenders can engage to integrate sustainable investing considerations into a lending program.
“By distilling some of the complexities in the ESG data landscape, we hope to further contribute to the significant amount of work already underway in this space by proposing methodological best practices that institutional investors and agent lenders can engage on,” said Travis Whitmore, lead securities finance researcher at SSA and author of the white paper.
“Sustainable investing is increasingly influencing how asset owners and managers are making investment related decisions, and it is important to align on how to integrate ESG data into our lending programs,” said Nick Delikaris, Co-Chair of the RMA FTAC. “This paper provides an overview on the varying data sources and methodologies, which, to-date have been hard to understand, but taking a data-centric approach is the only way to implement a customized ESG-framework in a securities lending program.”
The paper examines:
- Primary reservations behind the coexistence of sustainable investing and securities lending
- How and why ESG data are differentiated, including their different attributes and how they can be leveraged
- The definition of ESG in the context of securities lending
- Best practices to facilitate shareholder activism in a securities lending program
- Potential non-cash and cash collateral solutions for sustainable lending
“A previous RMA survey found while the majority of institutional investors believe securities lending can coexist with ESG, they also agree that securities lending needs to evolve to integrate investors’ ESG considerations,” said Fran Garritt, RMA’s Director of Securities Lending and Global Markets Risk. “This paper helps in that evolution.”
Founded in 1914, The Risk Management Association is a not-for-profit, member-driven professional association whose sole purpose is to advance the use of sound risk management principles in the financial services industry. RMA promotes an enterprise approach to risk management that focuses on credit risk, market risk, and operational risk. Headquartered in Philadelphia, Pennsylvania, RMA has 1,900 institutional members that include banks of all sizes as well as nonbank financial institutions. They are represented in the Association by 18,500 individuals located throughout North America, Europe, Australia, and Asia/Pacific.
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