By signing the ESG in credit risk and ratings statement, credit rating agencies and fixed income investors commit to incorporating ESG into credit ratings and analysis in a systematic and transparent way. To date, the statement is supported by around than 180 investors (with over US$40trn in collective AUM) and 25 credit rating agencies (CRAs).
This statement remains open to new credit rating agency and investor signatories.
Contact [email protected] for information on how to sign up.
We, the undersigned, recognise that environmental, social and governance (ESG) factors can affect borrowers’ cash flows and the likelihood that they will default on their debt obligations. ESG factors are therefore important elements in assessing the creditworthiness of borrowers. For corporates, concerns such as stranded assets linked to climate change, labour relations challenges or lack of transparency around accounting practices can cause unexpected losses, expenditure, inefficiencies, litigation, regulatory pressure and reputational impacts.
At a sovereign level, risks related to, inter alia, natural resource management, public health standards and corruption can all affect tax revenues, trade balance and foreign investment. The same is true for local governments and special purpose vehicles issuing project bonds. Such events can result in bond price volatility, and increase the risk of defaults.
In order to more fully address major market and idiosyncratic risk in debt capital markets, underwriters, credit rating agencies and investors should consider the potential financial materiality of ESG factors in a strategic and systematic way. Transparency on which ESG factors are considered, how these are integrated, and the extent to which they are deemed material in credit assessments will enable better alignment of key stakeholders.
In doing this the stakeholders should recognise that credit ratings reflect exclusively an assessment of an issuer’s creditworthiness. Credit rating agencies must be allowed to maintain full independence in determining which criteria may be material to their ratings. While issuer ESG analysis may be considered an important part of a credit rating, the two assessments should not be confused or seen as interchangeable.
With this in mind, we share a common vision to enhance systematic and transparent consideration of ESG factors in the assessment of creditworthiness.
How credit rating agencies support this vision
The credit rating agencies listed below recognise the needs of investors for greater clarity on how ESG factors are considered in credit analysis. In order to achieve this shared goal to enhance systematic and transparent consideration of ESG factors in the assessment of creditworthiness, the credit rating agencies listed below affirm their commitment to:
- evaluate the extent to which ESG factors are credit-relevant for different issuers;
- publish their views transparently on the ways in which ESG factors are considered in credit ratings;
- review the ways ESG factors are integrated into credit analysis as our understanding of these factors evolves;
- maintain organisational governance and resourcing to deliver quality ratings, including ESG analysis where relevant;
- participate in industry-wide efforts to develop consistent public disclosure by issuers on ESG factors that could impact their creditworthiness;
- participate in dialogue with investors to identify and understand ESG risks to creditworthiness.
Credit rating agency signatories
Organisation A-Z | |
---|---|
Cerved Rating Agency S.p.A. |
JCR Eurasia Rating Kroll Bond Rating Agency Liberum Ratings Microfinanza Rating Moody’s Corporation Nordic Credit Rating Pacific Credit Rating RAM Ratings Rating-Agentur Expert RA GmbH Rating and Investment Information, Inc. Scope Ratings S&P Global Ratings |
How investors support this vision
The investors listed are all signatories to the six UN-supported Principles for Responsible Investment. In signing the Principles, the investors listed below affirm their commitment to:
- incorporate ESG factors into investment analysis and decision-making processes;
- seek appropriate disclosure on ESG issues by investee entities;
- report on activities and progress towards implementing responsible investment.
Specifically, as fixed income investors, and as the primary users of credit ratings, the signatories of this statement will support formal integration of ESG factors into ratings. This helps ensure ESG risks are appropriately addressed in investment decision making, which will increase investor confidence in the quality and utility of those ratings. To support these efforts, these investors seek to participate in dialogue and engage in collaborative initiatives with other investors and credit rating agencies to further efforts to integrate ESG.
Investor signatories
A-Z | Organisation | |
---|---|---|
A |
Aberdeen Standard Investments |
AMP Capital Investors |
B |
Bank J. Safra Sarasin Ltd |
British Columbia Investment Management Corporation |
C |
Caisse de dépot et placement du Québec (CDPQ) |
Christian Brothers Investment Services, Inc. |
D |
Daintree Capital |
Domini Impact Investments |
E |
Elmwood Asset Management LLC |
Erste Asset Management GmbH |
F |
Federal Finance / Schelcher Prince Gestion |
Fountain Square Asset Management GmbH |
G |
Galliard Capital Management, Inc. |
Global Evolution |
H |
HESTA Super Fund |
HSBC Global Asset Management |
I |
IFM Investors |
Insight Investment |
J |
Janus Henderson Investors |
Jupiter Asset Management |
K |
Kairos Partners SGR Spa |
KLP |
L |
Länsförsäkringar AB |
LocalTapiola Asset Management Ltd |
M |
M&G Investments |
Mirova |
N |
Neuberger Berman Group LLC |
NN Investment Partners |
O |
Oak Hill Advisors |
Ontario Teachers’ Pension Plan |
P |
Partners Group AG |
PineBridge Investments |
Q |
QBE Insurance Group Limited |
QIC |
R |
RBC Global Asset Management |
Robeco |
S |
Sage Advisory Services Ltd. Co. |
SKY Harbor Capital Management |
T |
T&D Asset Management Co., Ltd. |
Tokio Marine Asset Management Co., Ltd. Japan |
U |
UBS Asset Management |
Union Bancaire Privée, UBP SA |
V |
Van Lanschot Kempen N.V |
Victorian Funds Management Corporation |
W |
Wellington Management Company LLP |
Wespath Benefits and Investments |
Z |
Zurich Insurance Group |
This statement remains open to new credit rating agency and investor signatories.
Contact [email protected] for information on how to sign up.
Downloads
Statement on ESG in credit risk and ratings (French)
PDF, Size 0.7 mbStatement on ESG in credit risk and ratings (Spanish)
PDF, Size 0.63 mbStatement on ESG in credit risk and ratings (Portuguese)
PDF, Size 0.64 mbStatement on ESG in credit risk and ratings (Japanese)
PDF, Size 0.26 mb负责任投资原则(PRI)关于‘信用风险与评级中的ESG’声明 (Chinese)
PDF, Size 0.27 mb