ICMA Explores Role of Repo Market in Sustainable Finance

A new ICMA paper looks at the intersections between the repo and collateral market and sustainable finance.

The ICMA European Repo and Collateral Council (ERCC) has published a new paper exploring potential green and sustainable advances in repo and collateral markets.

In particular, the paper looks at the different possible intersections between the repo and collateral market and sustainable finance:

  • Repo with green and sustainable collateral, e.g. where buyers and sellers would only transfer bonds that are classified as green
  • Repo with green and sustainable cash proceeds, e.g. requiring the cash loaned in a repo transaction to be invested in green projects or activities
  • Repo between green and sustainable counterparties, e.g. requiring counterparties to meet certain sustainability criteria or performance targets

The paper also assesses the opportunities and potential risks (e.g. greenwashing) involved with integrating sustainable finance objectives in repo and collateral markets.

The paper has been published alongside a list of consultation questions and is intended to serve as a starting point for promoting a broader discussion in the repo community on sustainability.

The paper, available here, is open for comment until 28 May 2021.

The results will help the ICMA ERCC to identify areas of focus going forward and help to frame future workstreams.

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