Global investments company BNY Mellon announced today the launch of a new capability for its electronic collateral schedule manager, RULE, enabling the incorporation of ESG factors into clients’ collateral negotiations and decisions.

BNY’s RULE enables collateral providers and receivers to negotiate collateral schedules, and establish which assets each party is willing to accept as collateral in real time. With the new capabilities, collateral receivers and providers can agree that only securities with a certain ESG rating are acceptable as collateral.

esg playbook

The functionality for the ESG capabilities is drawn from MSCI ESG Ratings through BNY Mellon’s ESG Data Analytics platform, assigning securities with an environmental score, a social score and a governance score, and aggregates them into a final ESG letter rating, from AAA to CCC.  According to BNY Mellon, over time the company expects to add more data sources into ESG Data Analytics.

Brian Ruane, CEO of Government Securities Clearing Corp., Clearance & Collateral Management and Credit Services at BNY Mellon, said:

“Rolling out this capability takes RULE, a proven technology that has already transformed the process of negotiating collateral schedules, and expands it into a very crucial and topical area of focus for the industry. Now, through the incorporation of capabilities from ESG Data Analytics, a client can bring their ESG priorities into negotiations around acceptable collateral, adding an entirely new dimension of utility to the platform.”