ESG Data in Structured Finance: The More the Merrier

This commentary delves into the intersection of sustainable finance and securitisation markets, highlighting the growing need for ESG-related data in securitisation. To unlock the potential of sustainable finance in securitisation, data and transparency are critical. In this commentary, we explore the ESG disclosure data that is currently available in the European structured finance market and how this could be improved.

Despite challenges in standardisation, including the lack of uniformity in energy performance certificate frameworks and limitations in reporting requirements, DBRS Morningstar believes that the gradual shift towards mandatory reporting and the inclusion of specific environmental reporting data can facilitate more comprehensive assessments of energy consumption and greenhouse gas emissions in securitised portfolios.

“Disclosure of additional data on consistent basis would allow for more detailed credit analysis of ESG factors and it would facilitate the benchmarking of sustainability credentials of specific securitisation transactions against each other”, said Mudasar Chaudhry, Head of European Structured Finance Research.