Sustainability-linked derivatives: Difference between revisions

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 Is ISDA desperately trying to stay ''relevant''? Recent clumsy land-grabs of [[ICMA]]/[[ISLA]] territory and forays into [[2023 ISDA Digital Asset Transactions Definitions|crypto]] give that impression. In any case, the irony that ISDA’s latest foray into the new normal — “sustainability-linked derivatives” — should so resemble a notorious example of environmental disaster is rich:
-An embedded community of toilers, supposedly there to steward the onward prosperity of the wider environment, swept up by fashionable collective delusions, wastes every tree in sight in pursuing mad, hypercomplicated and illogical schemes for imaginary investors who no-one has seen, let alone expressed demand for the product.
+A community of earnest toilers, supposedly there to vouchsafe the community’s onward prosperity, falls into the throes of a voguish collective delusion and sets about a wastes every tree in sight pursuing mad, hypercomplicated and illogical schemes for imaginary investors who no-one has seen, let alone heard expressing demand for such an offering.
-Even so this feels like a step further through the looking glass, deeper down the rabbit hole.  ISDA’s previous follies at least tried to cater to existing markets and regulatory imperatives, however cack-handedly. Sustainability derivatives are an attempt to create a new one out of — ~cough~ — hot air.
+ISDA’s recent missteps Even so this feels like a step further through the looking glass, deeper down the rabbit hole.  ISDA’s previous follies at least tried to cater to existing markets and regulatory imperatives, however cack-handedly. Sustainability derivatives are an attempt to create a new one out of — ~cough~ — hot air.
 ===How they are meant to work===
 If its discussion paper is anything to go by, not even ISDA has a clear idea what a sustainability-linked derivative would look like. Their best suggestion is that it would be some kind of plug-in to a normal swap — say an interest rate swap — containing a ratchet device to adjust the parties’ respectively spreads dependent on their compliance (or not) with certain pre-agreed  [[ESG]] [[key performance indicators]].