ESG/sustainable finance in securities lending

Today, more and more investment strategies are not only led by profit considerations but, also by the incorporation of environmental, social and governance factors and their effect on our planet and society. Sustainable investment strategies are not only limited to the relationship between client advisers and investors but also need to be considered in other business areas, such as lending/borrowing and securitisation/collateralisation. Achieving an effective incorporation of sustainability risks and opportunities to the regulatory framework requires collaboration between global and national policy makers, regulatory and industry bodies. This paper provides the current status regarding global developments — geographically, regulatory and industry driven — in incorporating ESG factors to the securities lending business/process, the current holistic regulatory environment and the current data requirements and challenges, together with suggested guidance for compliance personnel. As a final remark, all financial initiatives and regulations require data — key factors are generation, collection, enrichment, processing and distribution in a timely manner and of top quality — not only as part of the investor's advisory process, but also when it comes to the integration of ESG into the securities lending process.