ESG Task Force

$11.6 trillion – or $1 of every $4 invested in the United States – was invested under ESG investment strategies.

This year, SFA launched an effort to assess how environmental, social and corporate governance (ESG) investing and reporting can be applied and accessed in the securitization market. As part of this effort, we held our inaugural SFA ESG Symposium, a daylong roundtable focused on applying ESG principles in our market.

We are encouraged by the robust dialogue among the broad range of market participants at our symposium and look forward to developing work streams through which participants can develop best practices that will add value to the entire industry for ESG investing applications.

Publications

January 19, 2021

Sustainable Investing is an investment discipline that integrates environmental, social and governance (ESG) considerations to the investment process and straddles across equity and fixed income markets. The unprecedented volatility that has come to define 2020 is expected to boost flows into an already thriving ESG market. SFA is committed to guiding the securitization industry towards a goal of building a robust ESG market in structured finance.

November 20, 2020

Growing ESG in securitization: 81% of issuers incorporate ESG in their overall business operations, 73% within asset origination/underwriting practices, and 56% sponsoring or developing ESG-focused ABS/MBS programs. “Client Demand” is #1 factor motivating ESG for Institutional Investors in securitization. View the results and takeaways of SFA ESG Engagement survey.

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Learn More

Environmental, Social and Corporate Governance, or ESG, investing has now hit the mainstream as a consideration – and increasingly a key driver – of investment approaches and analysis for individuals and institutions alike. ESG investing has its roots in what began as ‘socially responsible’ investing in the 1960s, when investors began to screen their investment opportunities based on industry involvement such as tobacco production and sales or a company’s dealings in South Africa with respect to the apartheid regime. Today, there is broad acceptance and interest in ESG investing with the existence of targeted mutual funds, indices, and there is also a growing focus on data availability and analysis by ratings agencies and analytics firms.

 

ESG FACTORS

Environmental

  • Climate change
  • Natural resources
  • Sustainability

Social

  • Diversity
  • Human rights
  • Consumer protections

Governance

  • Corporate governance
  • Corporate behavior
  • Compensation structure

 

The above categories are high level and only scratch the surface of the ESG-relevant activities that investors – and issuers – may choose to focus on.

For our part, the Structured Finance Association has very recently launched an effort to assess how ESG investing and reporting can be applied and accessed in the securitization market. As a jumping off point the Association has begun work on identifying a framework for reporting on ESG factors within the assets of ABCP vehicles at the conduit level.

On December 5, 2019, SFA held an ESG Symposium that brought together nearly 200 engaged participants for a day-long conversation to promote ESG principles within the structured finance market.

SFA has published Key Takeaways from the Symposium which can be downloaded via the link below. Additionally, some of the slides that were presented by our guest speakers are available below.

 

SFA ESG Symposium: Key Takeaways

 

Below please find slides from some of the presenters:

The symposium encouraged important dialogue among a broad range of market participants and SFA looks forward to hosting additional ESG events in the future.

If you’re interested in joining SFA’s ESG Task Force, please email Hunter Hamrick at [email protected]

  • According to Harvard Business Review, over $11.6 trillion of all professionally managed assets – $1 of every $4 invested in the United States – were under ESG investment strategies, a sharp 390% increase from 2010 when the amount was close to $3 trillion overall.
  • ESG is such an important consideration that major stock exchanges such as the New York Stock Exchange have introduced their own sustainability guidelines, such as the Principles for Responsible Investment.

“ESG issues that have financial implications are increasingly part of business decisions, and investors who embrace these changes will be the industry leaders of the future. SFA is helping to define these issues and create the right frameworks that will make ESG data more transparent for investors.”

- Libby Bernick Head of Sustainability, DBRS Morningstar

News

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Industry News

October 21, 2021

On October 21, the Financial Stability Oversight Council (FSOC) voted to publish a new report on climate-related financial risk that acknowledges climate change is an “emerging and increasing” threat to financial stability. Included in the 133-page report is an outline of how the U.S. Securities and Exchange Commission (SEC) has begun to evaluate its disclosure rules and requested public comment on ways to improve climate disclosures relating to public companies and ESG funds—to provide investors with reliable, credible data and make better-informed, more efficient decisions on climate-related financial risks.

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Industry News

October 19, 2021

On October 19, UK Chancellor Rishi Sunak announced the publication of a new report, Greening Finance: A Roadmap to Sustainable Investing, outlining the country’s strategy for implementation of new Sustainability Disclosure Requirements (SDR) for investors and businesses. These latest requirements align with standards set by the Task Force on Climate-related Financial Disclosures (TCFD).

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Industry News

October 5, 2021

On October 5, Federal Reserve Board Vice Chair Randal Quarles delivered the unambiguous message – LIBOR is ending. During his speech at the Structured Finance Association conference, SFVegas 2021, Quarles said he expects to see the market transition to SOFR accelerating in these “final 87 days” of 2021.

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Contact

Jennifer Earyes

Jen Earyes

Head of Policy

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Alyssa Acevedo

Vice President, Policy Development

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