S&P launches ESG sections in corporate credit rating reports
Source: Middle East Insurance Review | Mar 2019
S&P has started to include environmental, social and governance (ESG) sections within its issuer credit rating reports on corporate entities.
The announcement coincided with the publication of the UN Principles for Responsible Investment’s (PRI) third instalment of the ‘Shifting perceptions: ESG, credit risk and ratings’ report series, which recommends that credit rating agencies explicitly signpost credit-relevant ESG risks and opportunities in rating reports.
S&P managing director and head of sustainable finance Michael Wilkins said, “The fixed-income market’s heightened focus on ESG has only emerged recently. However, ESG has been at the heart of our ratings approach for many years. We have long incorporated ESG considerations into our credit analysis. What we aim to do now is to more clearly underline to industry bodies, investors and stakeholders how we do so.”
S&P will be incorporating the ESG sections into its corporate ratings reports in phases. The process has started with two sectors that have greater exposure to ESG risks and opportunities – the oil & gas and utilities sectors.
The agency said it is rolling out the new section to all major companies across every sector and to smaller companies in the sectors most exposed to ESG factors, which may be relevant to ratings. It expects to incorporate ESG sections in approximately 2,000 credits – representing around 40% of its rated corporate universe – throughout the course of the year. M