Sustainable Finance under Global Securities Financing

Sustainable Finance and functioning capital markets make a major contribution to mastering the transformation towards a more sustainable world. We believe that fair, reliable and stable market infrastructures as well as transparent reporting and the availability of high-quality information are at the core of sustainable economies. Sustainable Finance is a driving force to strengthen practices and standards across the industry globally and to reorient capital flows towards more sustainable investments.

As a post-trade infrastructure, Clearstream provides markets with trusted, transparent and secure triparty collateral and securities lending services in line with highest regulatory and best practice standards. We thus enable investor engagement and support our customers in achieving their funding- and financing-related objectives and requirements.

Promoting strong governance

With the introduction of regulation such as the Shareholder Rights Directive II in the European Union, governance, i.e. the G in ESG, has taken centre stage with a particular focus put on investor stewardship and transparency underpinned by sound operating models. This extends to securities finance and collateral management where leading industry standards and best practices were developed over time.

For instance, our servicing models facilitate automated recalls of securities that are posted as collateral or lent to counterparties ahead of security event dates, thereby facilitating the exercise of rights and long-term investor engagement in a timely manner. This is supported by our asset servicing, custody and settlement offering and our high-quality, transparent and secure processes. 

ESG collateral

Clearstream is committed to providing efficient solutions to support market liquidity in ESG-oriented financing as the market matures and opportunities continue to emerge in the trading, clearing and post-trading value chain.

When selecting collateral and applying ESG filters, the focus of investors is still on issuer or asset exclusions. We see rising demand around reliable ESG data to further support both negative and positive screening that reflect the clients’ objectives as the industry frameworks and standards develop and as the ESG-focused asset segments continue to grow.

The new ESG bond metrics alongside the existing risk and liquidity metrics (100+ data points) support triparty customers to define collateral eligibility, haircuts and concentrations for triparty business e.g. cash-reinvestment or collateralised loans. Such ESG bond identifiers facilitate ESG bond financing strategies and support the secondary market liquidity in growing instruments such as green, social, sustainability and sustainability-linked bonds whilst leveraging available industry standards, principles and guidelines.