This is the second quarterly update compiled by the PRI to track the progress that credit rating agencies (CRAs) are making to enhance the transparent and systematic integration of ESG factors in credit risk analysis, in keeping with their commitment to the ESG in Credit Risk and Ratings Statement.

This update comes at a very challenging time, while the world is trying to adapt to the fallout of the COVID-19 crisis. CRAs have been adjusting to the consequences of the pandemic on credit risk. Unsurprisingly, the number of rating actions has increased: this update contains a sample of those that explicitly cite ESG issues among the driving factors. The increase in research reports on the ESG credit implications of the pandemic is also noteworthy. The outreach on ESG topics has remained high, thanks to virtual events.

The quarterly updates follow the report series Shifting perceptions: ESG, credit risk and ratings, which documents the progress that CRAs have made since the launch of the initiative in May 2016.

The excel file below allows fixed income investors to use the CRA latest resources as a tool in their ESG integration process and create opportunities to continue the investor-CRA dialogue that the PRI initiated.

The excel file includes:

  • Reports: a sample of research reports produced by CRAs related to ESG consideration (sectoral and thematic) and credit risk.
  • Rating actions: a selection of CRAs’ rating opinions that have ESG factors among the key drivers underpinning the ratings’ rationale or that contain a dedicated ESG paragraph.
  • Events: a list of events that have either been organised by CRAs or in which they have participated as speakers on ESG factors and credit risk.

Please also refer to the first tab of the file for instructions on how to use it.

This is not a commercial platform for CRAs. It is also important to recognise that the CRAs supporting the initiative vary in size and are at different stages of their development in making ESG factors more explicit in their methodology, analysis and credit risk assessments. Not all of them will have regular quarterly inputs, and we are very grateful to those who have submitted their contribution this quarter.

The PRI hopes that you find this new tool useful and welcomes feedback.

For questions please contact:

Carmen Nuzzo
Head of Fixed Income
carmen.nuzzo@unpri.org

Sixtine Dubost
Analyst, Investment Practices
sixtine.dubost@unpri.org