What is ESG?
ESG stands for Environmental, Social, and Governance and is an increasingly important consideration for securitization, structured finance, covered bonds, asset backed commercial paper and commercial paper transactions.
ESG criteria has become an increasingly important assessment and reporting requirement for TAO Solutions and its software applications. Institutional investors, regulators, rating agencies and central banks are progressively applying ESG criteria as a part of their analysis methodologies to assess risks and determine appropriate pricing. ESG metrics remains a work in progress for the securitization industry as asset backed securities ESG ABS) and mortgage backed securities (ESG MBS) are issued involving different asset classes, collateral types and jurisdictions.
As its name suggests, ESG considers 3 factors: environmental, social, and governance factors. Through ESG screening, investors will safely place their cash in earth-friendly and socially aware securitization, structured finance transactions that align with policies and objectives.
Key ESG Factors
There is no definitive taxonomy of ESG factors. ESG factors are usually interlinked.
Environmental
- Conservation of the wildlife
- Global climate change and carbon emissions
- Air and pollution
- Diversity
- Deforestation
- Energy potency
- Waste management
- Water scarceness
Social
- Consideration of individuals & relationships
- Client satisfaction
- Information protection and privacy
- Gender and variety
- Worker engagement
- Community relations
- Human rights
- Labor standards
Governance
- Standards for running an organization
- Board composition
- Audit committee structure
- Graft and corruption
- Govt compensation
- Lobbying
- Political contributions
- Whistle blower schemes
ESG Metrics
There is not a unified approach to the calculation or presentation of various ESG metrics. Investors will use a variety of analytical approaches and information sources to deal with ESG criteria.
ESG Data
Obtaining and providing the necessary ESG information is a challenging task for many industry participants. The necessity of having a software solution system that aims to extract high-quality information adaptably, cheaply, and expeditiously with security and resilience for third-party usage is essential.
Data quality needs two essential ingredients, namely materiality and validity. Materiality tracks the degree of insight attainable from any information in addressing funding relevant queries. Validity tracks the particular capture of that insight therein information. Validity can replicate judgment, accuracy, timeliness, graininess, and transparency.
The new global industry benchmark for securitization, structured finance and ESG software as a service solution catering for issuers, aggregators, lenders, ABCP conduits, trustees and regulators.
Multi-jurisdictional, asset class agnostic SaaS software solution addressing the complex requirements involving end-to-end administration and regulatory reporting requirements for the financial services industry.
Canada's mortgage funding and portfolio management software as a service solution built for issuers and aggregators.
Representing the de facto standard for mortgage securitization, structured finance and covered bond SaaS software solutions in Canada.
LeaseSpark is a cloud SaaS application that improves the efficiency of your daily equipment finance operations, making it easier to originate, administer and manage deals throughout their lifecycle.
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