Structured Finance Association Releases Market-Wide ESG Survey Results

CEO Bright Says Report Can ‘Set the Foundation For Large-Scale, Generational Change in How We Report and Analyze Sustainability and ESG Factors in Securitized Lending’

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The Structured Finance Association (SFA) today released the results of a market-wide survey on the extent environmental, social and governance (ESG) principles are incorporated within the $13 trillion structured finance market that provides capital to large segments of credit in the housing, credit card, automobile, corporate and other asset-backed borrowing markets.

“We think this report demonstrates our market is poised to set the foundation for large-scale, generational change in how we report and analyze sustainability and ESG factors in securitized lending,” said SFA Chief Executive Officer Michael Bright. “It is clear that prioritizing ESG principles is a key commitment for consumer and corporate lenders and that capital investing in these sectors are demanding it. SFA is dedicated to our continued collaboration with market participants, the Biden-Harris administration, and legislators on Capitol Hill to advance our collective goals.”

The survey, conducted in August and September of 2020, reflects input from 49 firms representing diverse perspectives across the securitization marketing, including institutional investors, securitization bond issuers, large diversified financial institutions, rating agencies, and other service providers.

Key takeaways follow. The report is attached and can be viewed in its entirety here.

• A vast majority of securitization market participants (86%) reported they have ESG programs in place at the enterprise level;
• Nearly half (47%) of all securitization market participants report an ESG program in place at the structured finance level;
• 81% of securitization bond issuer respondents currently incorporate ESG in their overall business operations, and 73% do so within their asset origination and underwriting practices; and,
• While currently only 13% of the securitization bond issuer respondents sponsor an ESG-focused securitization program, 43% indicated they are developing one.

SFA recently announced a new diverse board of directors and has launched an ESG task force to develop guides and frameworks on ESG that are driven by the interests and needs of market participants. The association expects Capitol Hill and regulators to remain focused on ESG in the 117th Congress and will be hosting its 2nd Annual ESG Symposium on December 15-16.