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ESG Derivatives Need Right Targets to Avoid ‘Backfire’ for Banks – Bloomberg Law

Oct. 22, 2021, 11:49 AM

Financial institutions creating ethical derivatives face a challenge to determine the right sustainability goals to avoid greenwashing, according to bankers looking at such products.

Using robust key performance indicators (KPIs) to measure corporate sustainability progress is absolutely fundamental, according to Belinda Ellington, a managing director on Citigroup Inc.’s legal team with a focus on sustainable finance. Yet determining what sustainability targets are most appropriate for each company is still a work in progress, said Claire Coustar, Deutsche Bank’s global head of ESG for fixed-income and currencies.

If KPIs are not verifiable, measurable and linked to environmental or social …