​ESG Practices in the Municipal Securities Market
Section: Around the Nation

The Municipal Securities Rulemaking Board has issued a request for information to solicit public perspectives on environmental, social, and governance (ESG) practices in the municipal securities market. The MSRB is seeking this input as part of its broader stakeholder engagement on ESG trends in the municipal securities market and to help inform its mandate of protecting investors, municipal issuers, and the public interest by promoting a fair, efficient and transparent municipal market. The $4 trillion municipal securities market by its nature finances many environmental or social related projects in communities across the country – including funding for clean energy and water, educational attainment, heath care outcomes, affordable housing, and economic redevelopment.

Evolving market practices in the area of ESG raise considerations for investor protection, issuer protection and the overall fairness and efficiency of the municipal market, as well as opportunities for increasing data transparency and accessibility through enhancements to the MSRB’s Electronic Municipal Market Access (EMMA®) system.
The MSRB’s request for information contains a number of questions specifically for issuers, investors, dealers and municipal advisors. 

NASACT would like to craft an association response and is interested in any feedback you may be able to provide. We are interested not only on the questions posed below for issuers, but also on ANY general comments you may have. Please send your comments to Cornelia Chebinou by February 11. For those who wish to respond directly to the MSRB, the comment period is open for 90 days, with comments due to be submitted by March 8, 2022.

MSRB is specifically asking the following question of issuers:
  1. Are you currently providing ESG-Related Disclosures or ESG-related information beyond the legally required disclosures in your offering documents, continuing disclosures or other investor communications? If so, please consider providing examples. If not, please consider describing how you address ESG-Related Disclosures in your offering documents, continuing disclosures or other investor communications. In your view, should municipal issuers include a separate section in their official statements and other offering documents expressly devoted to ESGRelated Disclosures? 
  2. Do you believe the information included in ESG-Related Disclosures should be standardized? If so, how? If not, why not? In your view, is there a consensus on what information and which metrics are important? If so, can you provide insight as to what consensus you believe does or could exist? If not, what barriers do you believe exist in reaching a consensus? What topic areas do you believe are relevant and should be included in ESG-Related Disclosures? 
  3. Have you issued ESG-Labeled Bonds? If so, please consider providing an example and describing what criteria were used to make the ESG designation. Did you utilize an independent party to validate or otherwise attest to the use of the ESG designation? Please consider explaining why or why not. 
  4. If you issued ESG-Labeled Bonds, did you commit to providing any ongoing or continuing disclosure related to the ESG designation? If so, was that disclosure commitment incorporated into the continuing disclosure agreement or similar contractual obligation related to Securities Exchange Act Rule 15c2-12 (collectively, “CDA”)? If so, please consider providing an example of the CDA. If the disclosure commitment was not incorporated into the CDA, how is the information made available to an investor on an ongoing basis and at what frequency? 
  5. Are you providing information to the credit rating agencies regarding ESG-related risk factors and ESG-related practices? If so, what type? In your view, how does this information generally compare to the information provided in your offering documents and continuing disclosures? Are the credit rating agencies requesting any new types of ESG-related information? Has the credit rating process changed in any significant ways in relation to ESG-related information?