Finastra launches ESG Service to help banks deliver sustainable lending

By Gloria Methri

Finastra has announced the launch of its ESG Service, a cloud-native SaaS solution that streamlines sustainability-linked lending. Open and scalable, ESG Service facilitates the integration of sustainability performance target criteria into ESG pricing for both Finastra Loan IQ and other back-office systems.

Sustainability-linked loans utilize complex pricing structures with multiple moving parts that need to be tracked against the sustainability targets outlined in the credit agreement.

This can tie up resources and limit banks’ scope in terms of ESG product offerings and introduce risks associated with manual processes. Having an automated solution for managing the KPIs and ESG pricing changes of sustainability-linked loans enables banks to grow these lending portfolios efficiently at scale and minimizes the risks tied to manual processes.

Simon Thorogood, Senior Director, Corporate and Syndicated Lending, at Finastra said, “Our ESG Service offers banks a well-defined, transparent, and automated solution for managing ESG performance and the associated pricing adjustments, creating a more seamless experience for clients.”

“Furthermore, with complex and constantly-evolving ESG regulations on the horizon, having a centralized store of data will greatly aid banks in being able to efficiently and accurately meet their regulatory obligations in terms of meeting the relevant disclosure requirements.”

ESG Service is a dedicated application designed to support sustainability-linked loan pricing. As a cloud-native SaaS solution that uses open APIs, it provides flexibility to support varied deal structures and offers extensibility for the inclusion of new capabilities and partner applications. It also has the scope to add additional pricing components, beyond interest and ongoing fees, and the ability to support multiple transaction processing systems that require loan pricing adjustments.

By providing an automated means for tracking ESG performance and the related margin changes, the service will deliver significant benefits to users across the middle and back office.