The transition to a sustainable economy will take a massive amount of long-term funding. The financial services sector will be an essential partner in providing this funding and managing the risks associated with sustainable investments, including project risk and interest rate and currency risks.
Derivatives markets can play an essential role in this process. Derivatives enable more capital to be channeled towards sustainable investments; help market participants hedge risk related to environmental, social and governance (ESG) factors; facilitate transparency, price discovery and market efficiency; and contribute to long-termism.
This paper is intended to help market participants further understand the potential role of derivatives in sustainable finance. The paper outlines the range of product structures and transaction types that comprise the universe of ESG-related derivatives, including sustainability-linked derivatives; ESG-related credit default swap indices; exchange-traded derivatives on listed ESG-related equity indices; emissions trading derivatives; renewable energy and renewable fuels derivatives; and catastrophe and weather derivatives.
Documents (1) for Overview of ESG-related Derivatives Products and Transactions
Latest
Response to EC Call for Evidence on Tax Omnibus
On March 30, ISDA, the International Securities Lending Association and the Association for Financial Markets in Europe responded to the European Commission’s (EC) call for evidence on the tax omnibus. The associations argue that inconsistent interpretation of “beneficial ownership” among...
Managing Risk for Australian Superannuation Funds
Assets managed by the Australian superannuation sector reached A$4.5 trillion in December 2025, equivalent to around 160% of Australia’s GDP. Given its size, the sector has rapidly expanded its global footprint, with the share of offshore investments growing as a...
Updated OTC Derivatives Compliance Calendar
ISDA has updated its global calendar of compliance deadlines and regulatory dates for the over-the-counter (OTC) derivatives space.
Next Steps on a Much Improved Basel III Endgame
Publication of the revised Basel III endgame proposal earlier this month marks an important step towards completion of the global capital reforms, giving banks much-needed clarity on the likely calibration of the rules in the US. The new proposal is...