CUSIP Global Services (CGS) has added Environmental, Social and Governance (ESG) data attributes for corporate and municipal bonds in its data feed and desktop products.
The new ESG tags will enable bond issuers and investors to instantly identify and categorise securities that contain ESG attributes, distinguishing them as green, social, or sustainability bonds. ESG categorisation is determined by CGS upon review of primary offering documents as part of the CUSIP issuance process.
The CUSIP is a nine-character alphanumeric security identifier that captures the unique attributes of issuers and their financial instruments throughout the US and Canada. In the US bond market, the CUSIP is used by investors to uniquely identify and track securities and link them with the underlying issuing entity. With this enhancement of its data feed and desktop products, CGS will append a text-based descriptor to the standard CUSIP ID for ESG bonds designating them either a green, social or sustainability-oriented bond. The new attributes, which cover municipal and corporate debt, are provided at no additional cost and will include the verifying third party when available.
“With total new issuance volume for green, social and sustainability bonds reaching nearly USD500 billion in the first half of 2021 alone, it is clear that ESG principles have become a major priority for issuers and investors alike,” says Scott Preiss, Managing Director and Global Head of CUSIP Global Services. “By clearly tagging ESG bonds in the pre-market environment – and providing granularity on the specific type of ESG bond being issued – we are making it possible to seamlessly track these securities throughout the financial system using our universally recognised, industry standard taxonomy.”
The ESG segment of the bond market has experienced an average annual growth rate of 49 per cent since 2016, with the largest share of volume and deals coming out of the US market. Attractive both for their social benefits and the cost-advantages afforded to issuers, ESG bonds have become a cornerstone of many investor portfolios. As the segment continues to grow, this new enhancement to CGS’s data feed and desktop products will deliver the critical reference data necessary to track ESG bonds throughout security master files, risk systems and trading platforms worldwide.
For municipal bonds, the new ESG attributes can be further supplemented by CGS’ collaboration with ISS ESG (formerly ACRe Data), which links proprietary ESG scores for US municipalities to CUSIP municipal issuer codes. The ISS ESG scores, updated quarterly, offer additional ESG insights into US municipalities using a number of criteria, including socioeconomic, infrastructure, and climate-based factors.
