Sustainable securities lending: A letter to asset owners

The Global Principles for Sustainable Securities Lending (Global PSSL) Founder and CEO, Radek Stech, calls on asset owners to consider the impact of their securities lending practices and introduces what it means to make them sustainable in this contribution to the Minerva Blog.

October 29, 2021

Global PSSL for asset owners

As asset owners, you increasingly want to align your activities with the sustainable development agenda. Not only do we support your efforts, but we also want to help you work towards that goal.

You made it through the early stages of ethics-based investing when willingness and enthusiasm sufficed, and you cobbled together your own Green, ESG, or Sustainable investment programs from scratch.  Along the way, you also became aware of the pitfalls of greenwashing, which can wipe out both investment dollars and goodwill. You appreciate sustainable development goals and are ready to reach them; the question is how?

Today’s asset owners have access to the brightest people in the world, sufficient resources and infrastructure, and access to relevant data to shift trillions onto a sustainable pathway. Investments are your core activities, but some of you will lend your assets to other stakeholders to make incremental income. This financial dynamic–securities lending–has been a source of contentious debate for many years. You’ve done your assessment and it is not our role to tell you whether to lend or not. But, if you do, please read on.

Global PSSL has worked with a broad community of stakeholders to create a guideline to help align asset owners lending with sustainable finance. We have done so by emphasising critical principles of transparency, stakeholder involvement and continuous improvement, alongside other specialist principles that you can implement in your own practices. We value inclusivity, with a full understanding that each stakeholder may have differing views, and we believe that our diversity has helped us create a stronger set of principles. With this public interest at the forefront of the Global PSSL’s operations, we implement tight regulation for consistency, integrity and openness in all our processes and publications. 

Understanding how competitive and contentious the world of securities lending can be, we deliberately de-commercialised Global PSSL as a not-for-profit organisation in October 2020, after two years of hard work that included a temporary home as part of a regional trade association. Now, Global PSSL cannot be sold-out or commercialised–this market standard is bound as accountable to the public, as I think this is the only credible way forward for this unprecedented, inclusive, global program.

Having a public interest in mind and being directly accountable to the taxpayers, Global PSSL does not compete with any other organisations. You will not find another public-interest and regulated market standard on securities lending and, with Global PSSL, you have a chance to help create the path forward for Securities Lending with the broader community of stakeholders. In the near future, we will also introduce a recognition scheme that will give you the opportunity to be identified for your efforts in this field.

As Global PSSL continues to grow, I’d like to invite more Asset Owners like yourself to join us as signatories to the principles that form our core message. It would be great if you showed that commitment as part of your broader pledge to ESG. You cannot focus all your time solely on commercial gatherings on ESG and securities lending – it is too risky for you!

Please take look at our website to see what we’ve achieved so far and get an idea of how we can work together to harmonise good business with good governance.

Watch Minerva’s Webinar on sustainable securities lending, featuring Radek Stech:

Last Updated: 29 October 2021