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ESG Disclosure Initiative

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

SFA and its Members are Developing an ESG Framework and Reporting Standards specific to Structured Finance

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This year SFA welcomed members to the ESG Disclosures Taskforce. The members represent every role in securitization—issuers, investors, servicers, data services—to consider the environmental, social and governance impacts that are material and relevant to structured finance.

To participate in this important and timely work, please use the ‘Join Today’ button on the right of the screen.

Publications

October 5, 2021

During SFVegas 2021, SFA’s CEO Michael Bright and Federal Reserve Vice Chair Randy Quarles discuss how to think about climate risk considering the Federal Reserve’s overall mandate.

October 4, 2021

Watch Darlene Rosenkoetter, Vice President, Global Head of Government Affairs and Public Policy, from S&P Global Ratings provide an update at SFVegas 2021 on where the administration and regulators are heading with ESG.

October 4, 2021

Neil Hohmann, Managing Director and Head of Structured Products from BBH Investment Management, discusses assessing the different types of climate risk in securitization. John D’Elisa, Director, Societe Generale touches on defining what ESG means for issuers and investors.

March 23, 2021

Michael Bright is joined by SFA President Kristi Leo and dv01’s Perry Rahbar and Charlie Oshman. They discuss what Environmental, Social, and Governance Investing (ESG) is, why it’s taking the finance market by storm, and what data is needed for ESG.

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 Jeff Gudiel 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

January 20, 2023

Participants in the Federal Reserve’s climate stress test pilot program—Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo—have received instructions on how the program will be conducted and what information will be gathered. The exercise, which follows the Fed’s September 30 announcement, will run until the July 31. The pilot program takes a two-prong approach, the first of which addresses the impact of physical risk—floods, wildfires, hurricanes—on assets in their commercial and residential real estate portfolios.

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Industry News

January 13, 2023

At the Symposium on Central Bank Independence, Federal Reserve Chair Jerome Powell emphasized his stance that climate change is not in the direct purview of the Fed’s responsibilities and will tread lightly when developing bank guidelines related to climate.

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SFA News

January 13, 2023

On January 5, 2023, on behalf of our investor members SFA submitted a letter to Fannie Mae and Freddie Mac (the GSEs) in response to their proposed single-family Social Index.

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Contact

Elen Callahan

Elen Callahan

Managing Director, Head of Research

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