Call to Reform Green Bond Lending Gains Momentum

Guest blog by: Michael Stanley-Jones, Senior Advisor, Global PSSL Secretariat Securities lending involving green bonds poses a rapidly emerging integrity risk with direct implications for sustainability strategy, risk governance, and fiduciary duty. While green bonds are structured to support the climate transition, their unmonitored deployment in lending markets risks undermining that purpose. Where Environmental, Social and Governance (ESG) mandates or regulatory frameworks require demonstrable environmental alignment, lending without restrictions or oversight these may breach internal policies or regulatory expectations—particularly when green assets are used to finance carbon-intensive short positions. A short position in finance refers to a trading strategy where an investor sells borrowed securities with the expectation that their price will decrease. A persistent lack of transparency in secondary market activities—including securities lending, collateral reuse, repurchase ...