The International Securities Lending Association's (ISLA) Council for Sustainable Finance (ICSF) has met for the first time to begin the drafting its a set of universal standards for environmental, social and corporate governance (ESG) in securities lending.
ISLA formed ICSF in December last year after wide-spread market debate around the compatibility of asset managers’ lending programmes and the growing trend of socially-conscious financing.
The council aims to offer wide-ranging solutions through the launch of its principles for sustainable securities lending (PSSL).
PSSL is a new voluntary sustainable finance mechanism for securities lending, following proposals by Radek Stech at the IMN’s 25th Annual Beneficial Owners International Securities Finance and Collateral Management Conference in September 2018.
The principles were formed and developed by a high-level working group comprises six beneficial owner institutions, including Aberdeen Standard Investments; Aviva Investors; BlackRock; KBC Asset Management NV; NN Investment Partners; and PGGM.
They are joined by ESRC funded Sustainable Finance – Law – Stakeholders Network of Exeter Law School; the World Pensions Council; Financial Decisions; and the Pan Asia Securities Lending Association.
The council is chaired by Stech, who is also council chair and founder of the Sustainable Finance, the Law, Stakeholders network at Exeter Law School.
According to ISLA, the PSSL remit is to have a strong and clear impact on the social, governance and long-term thinking elements of sustainable securities lending.
The principles will also enhance transparency around the impact of securities lending on the environment, ISLA adds.
Stech says there will be further announcements on how ICSF is going to progress through its initial implementation stages.
"I am convinced that the council's work will increase global confidence in sustainable securities lending," he says, adding that the council has a view to reaching maturity in the next few years so as to achieve the group's ambitious vision.
Andrew Dyson, CEO of ISLA, adds: “We are delighted with the formation of the ICSF, which to my mind, compliments and supports the ongoing advocacy and best practice efforts of the Association in the context of ESG and securities lending.”
