ICMA: market sees opportunities in green repo collateral but greenwashing concerns are widespread

ICMA ERCC consultation on the role of repo in green and sustainable finance: summary report

On 22 April, the ICMA European Repo and Collateral Council (ERCC) published a consultation paper on the role of repo in green and sustainable finance, exploring the sustainability aspects of repo and collateral as well as assessing the existing opportunities and potential risks in this area. In particular, the paper looked at three possible intersections between the repo and collateral market and sustainable finance: 1. Repo with green and sustainable collateral; 2. Repo with green and sustainable cash proceeds and 3. Repo between green and sustainable counterparties.

The paper was published alongside a list of consultation questions and was intended to serve as a starting point for promoting a broader discussion in the repo community on sustainability. The market consultation took place between 22 April 2021 and 4 June 2021. In total, 20 responses were received, representing views from 18 firms.

The objective of this summary report is to assess the feedback received to the consultation paper, highlighting the key themes raised by the respondents for each of the questions. The comments summarised in this report do not illustrate ICMA views, rather they are intended to outline the responses from the market. Where helpful we included quotes from individual responses to complement and elaborate on specific points. The consultation feedback has been presented and discussed at the relevant ICMA Committees such as the ERCC Committee and the Sustainable Finance Committee. As noted in the conclusion, the proposed next steps will be taken on a basis that is consistent with the global standards of the Green & Social Bond Principles promoted by ICMA.

This summary report only considers responses received during the consultation period and therefore reflects the views of a limited number of respondents. However, the discussion on the topic is ongoing and further feedback is welcome.

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