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 160 investors (with more than US$30trn in collective AUM) and 21 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 Microfinanza Rating
Cerved Rating Agency S.p.A. Moody’s Corporation
China Chengxin International Credit Rating Co., Ltd. Nordic Credit Rating
Dagong Global Credit Ratings Group Pacific Credit Rating
Fedafin AG Qivalio
Fitch Group, Inc. RAM Ratings
Golden Credit Rating International Co., Ltd. Rating-Agentur Expert RA GmbH
Japan Credit Rating Agency Rating and Investment Information, Inc.
JCR Eurasia Rating Scope Ratings
Kroll Bond Rating Agency S&P Global Ratings
Liberum Ratings  

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

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

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