Global Principles for Sustainable Securities Lending (Global PSSL) have published a consultation paper on ESG-driven securities lending and borrowing in emerging markets.
The draft hinges upon three components that relate to enabling market infrastructure, ensuring appropriate tax schemes and strengthening supportive legal foundations in various emerging markets.
To employ this standard, participating organisations will need to observe the central tenets of Global PSSL — as well as relevant regional ESG agendas — and demonstrate an active engagement with stakeholders, according to Global PSSL.
With an objective to be forward-looking, universal, fit for purpose and dynamic, the paper listed a number of challenges to delivering these aims, including a limited awareness of ESG, the stigma associated with certain aspects of securities lending and the limited participation of beneficial owners in securities lending programmes.
The draft was co-authored by International Finance Corporation’s (IFC) Oluwatoyin Alake, Stanbic IBTC’s Babatunde Majiyagbe, Global PSSL and University of Exeter Law School’s Dr Radek Stech, the South African Securities Lending Association’s (SASLA) Juanita Taylor, SASLA’s Jean Turner, and Global PSSL College of Advisors’ Roy Zimmerhansl.
The co-authors say: “When compared with more developed economies, the inherent flexibility of emerging markets grants them the agility necessary to adopt best practices. As this draft standard has identified, fragmentation is one of the barriers that increases costs and inhibits innovation.
“Global PSSL brings a broader community of practitioners, also ESG experts, and, in turn, increases trust and confidence in the markets”.
The consultation will end on 15 November 2021.
