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ESG Investing / Asset Management
BNY Mellon rolls out ESG analytics for collateral
Platform utility allows client to bring ESG priorities into negotiations around acceptable collateral
The Asset 16 Nov 2021

Market participants are now able to apply their environmental, social and governance (ESG) principles to the assets they are willing to accept as collateral, using BNY Mellon's ESG Data Analytics.

International collateral management clients using BNY Mellon's electronic collateral schedule manager RULE can now enjoy the capability to digitally express their ESG preferences by leveraging environmental, social and governance (ESG) ratings and indexes. The firm's US clients are able to take advantage of these same ESG eligibility capabilities by updating their schedules using the current US methodology.

The functionality draws on MSCI ESG ratings that assign ESG scores to securities under three distinct pillars: environmental, social and governance. These scores are then adjusted and aggregated into a final ESG letter rating, from AAA to CCC. 

ESG Data Analytics incorporate these ratings into clients' collateral eligibility decisions via the schedule manager. In practice, this means collateral receivers and providers can agree that only securities with a certain ESG rating are acceptable as collateral.

"Rolling out this capability takes RULE, a proven technology that has already transformed the process of negotiating collateral schedules, and expands it into a very crucial and topical area of focus for the industry," says Brian Ruane, CEO of Government Securities Clearing Corp at BNY Mellon. "Now, through the incorporation of capabilities from ESG Data Analytics, a client can bring their ESG priorities into negotiations around acceptable collateral, adding an entirely new dimension of utility to the platform."

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