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