This is the third 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.

Six months after the global outbreak of COVID-19, the pandemic remains a central concern for market participants. However, the focus of recent ESG-related activities by CRAs is shifting back to more typical sustainability topics, such as climate change, water risks or inclusion.

The PRI’s purpose is to provide market participants with a comprehensive resource and be up to date with the latest CRAs’ ESG-related activities. The information contained in the excel file below allows investors to use the CRA latest resources as a tool in their ESG integration process. It also allows CRAs to showcase their ongoing efforts to be more transparent about how ESG factor affect credit opinions and how research around ESG credit-relevant topics is improving. Finally, it creates opportunities to continue the investor-CRA dialogue that the PRI initiated through the ESG in Credit Risk and Ratings Initiative, now in its fourth year, and to discuss or challenge CRAs’ views.

This document is continuously evolving and improving based on the feedback that we receive from its users. The current edition contains items included in the 1Q and 2Q updates, as well as a few additions. Please note that the reporting period is from mid-June to mid-September, allowing the PRI to publish this update in a timely manner, at the end of Q3.

  • 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.
  • Country, region, global: new column
  • Sector: new column
  • Type of ESG issue (E, S, G, or global): new column
  • Methodology notes: new tab with all information related to the CRAs’ methodology for integrating ESG factors in credit ratings. This will not have to be updated every quarter.

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 tool – and its new features – useful and welcomes comments on how it can be improved.

For questions please contact:

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

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