The Big Themes Several themes emerged, with most related to the lack of a standard set of measures or guidelines around the factors covered by sustainability. These are summarised briefly below and are subject to greater scrutiny in the chapters that follow.
Investor demands
Focus
Measurement
Technology
Investors are asking issuers to lay their sustainability cards on the table
Choices galore and no easy way to choose
What to measure and how to measure it has led to a scramble for standards
Big data and artificial intelligence are moving in
Skills
Supply
Greenwashing
Impact
New roles in securitisation are emerging
Sustainable assets are hard to find
There are many shades of 'green' and not all are attractive
Proving the value of a sustainable approach will take time
At the beginning of 2020 (preCOVID-19), the ASF and Perpetual asked industry participants to give us their thoughts on the emerging trends in securitisation in the new decade. Looking back at that report now, it is interesting that while ESG received a passing mention, there was barely a comment about sustainability. 18 months later and the word is on everyone’s lips. Experienced participants will say they have always had a focus on sustainability. Investors, for example, typically include assessments of the quality of issuers, originators and assets in their models. Yet the emergence of an overt collective focus on sustainability and ESG factors is new.
7 Sustainability in Securitisation
It’s interesting that the ‘critical mass’ seems to be occurring now. While very few participants directly associated the focus on sustainability with COVID-19, it follows that the pandemic has galvanised thought around sustainability. “You can almost pinpoint the month (it was sort of MarchApril last year, while COVID was breaking). All of a sudden one of our ratings agencies announced a whole swathe of very formal ESG considerations in their ratings framework. We've had 10 years of building up to this point - it's just reached critical mass.” - Non Bank Issuer
“One of the things that a lot of the ESG market participants have been saying is that, eventually, there'll be a critical mass. Once you get to critical mass of interest, then that will precipitate a much broader take-up of this idea, approach or philosophy.” - Global Bank
