ESG incorporation in securitized products: The challenges ahead.

The report’s evidence is focused on CLOs. It is easier to scrutinise the ESG factors relevant to their underlying corporate loans than to the various loans that are linked to RMBS, CMBS and ABS, despite the latter products occupying the larger market share.

The PRI will continue to test these findings within the industry and broaden our regional analysis, as the importance of securitised products in sustainable finance is likely to grow. We intend to focus more on RMBS, CMBS and ABS and will expand our research to credit rating agency (CRA) practices. Finally, we will facilitate investor engagement with several stakeholders, including banks, CRAs, ESG information providers, legal counsellors and arrangers.