Climate Risk Scorecard

The Municipal Securities Rulemaking Board (MSRB) is the principal regulator of the $4 trillion municipal securities market, where it “protects and strengthens the municipal bond market, enabling access to capital, economic growth, and societal progress in communities across the country.” As part of its mission, the MSRB regulates the conduct of municipal securities dealers and advisors and establishes the rules, related guidance, and supporting compliance resources that govern these entities.  

Overseen by Congress and the Securities and Exchange Commission (SEC), the MSRB’s rules generally require SEC approval before they can be implemented. Although the MSRB is the principal regulator of the municipal securities market, it does not enforce its rules or perform compliance examinations. Rather, the MSRB supports the Financial Industry Regulatory Authority (FINRA), the SEC, and federal bank regulators who share responsibility for compliance exams and enforcing the rules that the MSRB is responsible for drafting. 

Investors are increasingly aware of the significant climate and ESG risks inherent in their business activities and investment portfolios. Municipal bond investors and the municipalities themselves face unique climate risks as – unlike companies that can move their headquarters and critical facilities, shift their product mixes and supply chains, and pivot their strategies – they are place-based and mission-constrained. Industry associations have developed voluntary best practices, and private vendors offer ESG certification services. However, adherence to these standards is optional and not standardized or regulated. The MSRB has an important role to play in protecting issuers, investors, and the overall fairness and efficiency of the municipal securities market through ensuring the disclosure of transparent, relevant climate information.