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SFA Publishes ESG Best Practices for Auto ABS and RMBS Disclosures

article by Structured Finance Association

SFA Environmental, Social, and Governance (ESG) Disclosures Initiative seeks to establish best practices for the securitization industry to report and disclose decision relevant ESG metrics across asset classes. The Industry-Wide working group developed a principles-based approach to guide the development of best practices for securitization disclosures, while the RMBS and Auto ABS working groups focused on specific disclosures within each of those asset classes. The resulting Best Practices seeks to promote uniformity across data sources by drawing upon and aligning with existing ESG frameworks, where possible.

The Best Practices also chart a path for future states of disclosure, identifying areas where market participants might look to develop ESG disclosures. The Appendix provides color and commentary from working group discussions on the recommended disclosure fields that were included in the first version of the Best Practices, as well as commentary on fields that could be included in future releases. As ESG continues to develop over time, the SFA ESG Disclosure Initiative will continue to work with market participants and policymakers to build off of the work that has been done to reflect best practices for ESG disclosures across the industry.