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 more than 150 investors (with nearly US$30trn in collective AUM) and 19 credit rating agencies (CRAs).

This statement remains open to new credit rating agency and investor signatories.

Contact fi@unpri.org 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
Axesor Rating Liberum Ratings
Cerved Rating Agency S.p.A. Microfinanza Rating
China Chengxin International Credit Rating Co., Ltd Moody’s Corporation
Dagong Global Credit Ratings Group RAM Ratings.
Fedafin AG Rating-Agentur Expert RA GmbH
Fitch Group, Inc Rating and Investment Information, Inc
Golden Credit Rating International Co., Ltd.. Scope Ratings
Japan Credit Rating Agency Spread Ratings
JCR Eurasia Rating S&P Global Ratings
Kroll Bond Rating Agency  

How investors support this vision

The investors listed overleaf 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
Aberdeen Standard Investments Christian Brothers Investment Services, Inc. Janus Henderson Investors PineBridge Investments
ACTIAM Church of Sweden Jarislowsky, Fraser Limited Principal Global Investors
Addenda Capital Inc. CIBC Asset Management Inc. Kempen Capital Management NV Prudential Portfolio Managers (South Africa)
AEGON Asset Management Colchester Global Investors Limited KfW Bankengruppe Public Investment Corporation (PIC)
Alberta Investment Management Corporation Colonial First State Global Asset Management (including First State Investments) KLP Public Sector Pension Investment Board
Alliance Bernstein Commonfund La Française Group QBE Insurance Group Limited
Allianz Global Investors Compass Group Länsförsäkringar AB QIC
Allianz SE Conning, Inc. and Conning Asset Management, Ltd. Legal & General Investment Management (Holdings) RBC Global Asset Management
AlphaFixe Capital Inc. Connor, Clark & Lunn Investment Management Ltd. Leith Wheeler Investment Counsel Ltd. Régime de Retraite de l’Université de Montréal
AMP Capital Investors DDJ Capital Management, LLC Local Government Superannuation Scheme RobecoSAM AG
Anima SGR Delta Alternative Management LocalTapiola Asset Management Ltd Royal London Asset Management
APG Asset Management Domini Impact Investments Lombard Odier Sage Advisory Services, Ltd.
Ardea Investment Management EGAMO Longfellow Investment Management Co., LLC Sanlam Investment Management (SIM)
ASR Nederland N.V. Element Investment Managers M&G Investments Sarasin & Partners LLP
Australian Ethical Investment Ltd. ERAFP - Etablissement de Retraite Additionnelle de la Fonction Publique Pension Scheme Maple-Brown Abbott Limited Saturna Capital
AustralianSuper Erste Asset Management GmbH Mariner Investment Group, LLC. Schroders
Aviva Investors ESG Portfolio Management MFS Investment Management Skandinaviska Enskilda Banken (SEB) AB
AXA Group Federal Finance Mirova SKY Harbor Capital Management
AXA Investment Managers Fidelity International MN Sparinvest S.A.
Bank J. Safra Sarasin Ltd Fiera Capital Corporation Mondrian Investment Partners Limited Stone Harbor Investment Partners LP
Barings LLC First State Superannuation Scheme Moneda Asset Management Svenska Handelsbanken AB (Publ)
Bâtirente Fonds de réserve pour les retraites - FRR Montrusco Bolton Investments Inc. (MBII) T&D Asset Management Co., Ltd.
BlueBay Asset Management LLP Franklin Templeton Investments Neuberger Berman Group LLC Tareno AG
BMO Global Asset Management Futuregrowth Asset Management Nikko Asset Management Co. Ltd. TD Asset Management (TD Asset Management Inc.)
BNP Paribas Asset Management Galliard Capital Management, Inc. NN Investment Partners Tokio Marine Asset Management Co., Ltd. Japan
Brandywine Global Investment Management, LLC Generation Investment Management LLP Nomura Asset Management Co., Ltd. TPT Retirement Solutions
Breckinridge Capital Advisors Geroa Pentsioak EPSV Norwegian Government Pension Fund Norway (Norwegian Ministry of Finance and Folketrygdfondet) Treehouse Investments, LLC
British Columbia Investment Management Corporation Global Evolution OFI Asset Management Triodos Investment Management B.V.
British Columbia Municipal Pension Plan Goldman Sachs Asset Management (GSAM) Ohman UBS Asset Management
Brown Advisory Gramercy Funds Management Ontario Teachers’ Pension Plan Union Asset Management Holding AG
BT Pension Scheme Hermes Investment Management OP Wealth Management (OP Asset Management Ltd, OP Fund Management Ltd and OP Property Management Ltd) Union Bancaire Privée, UBP SA
Caisse de dépôt et placement du Québec HESTA Super Fund Ostrum Asset Management University of Toronto Asset Management Corporation (re University of Toronto Endowment)
Caja Ingenieros Gestión SGIIC, SAU HSBC Global Asset Management Partners Group AG Vancity Investment Management
California Public Employees’ Retirement System CalPERS IFM Investors Payden & Rygel Victorian Funds Management Corporation
Calvert Research and Management Income Research & Management Pegaso - Fondo pensione complementare Wellington Management Company LLP
Candriam Investors Group Insight Investment Pension Protection Fund Wespath Investment Management (General Board of Pension and Health Benefits of the United Methodist Church)
CCOO, FP Investec Asset Management PGGM Investments Zurich Insurance Group
CDC - Caisse des dépôts et consignations Itaú Asset Management PGIM Fixed Income  
Challenger Limited IVM Caring Capital PIMCO  

This statement remains open to new credit rating agency and investor signatories.

Contact fi@unpri.org for information on how to sign up.