Many ESG factors have traditionally featured in credit risk analysis, but the role they play is often not well communicated. The PRI’s ESG in Credit Risk and Ratings initiative is working to increase transparency over how investors and credit rating agencies consider ESG factors, and support them in taking a more systematic approach to doing so.

A series of forums held around the world has brought investors and credit rating agencies together to cultivate a common language, discuss ESG risks to creditworthiness and bridge disconnects. A report series followed that helped to: address misconceptions, enhance transparency, equip the market with a better understanding of ESG factors’ relevance for credit risk analysis.

The next phase of the initiative will broaden to other stakeholders, especially issuers, and will focus on action areas to improve the process for how ESG factors are considered, and how they are captured in credit risk assessments, ratings and reports.

The initiative is currently supported by more than 150 investors and nearly 20 CRAs. It is not too late to join.