All Thought leadership articles – Page 7
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Thought leadershipESG, credit risk and ratings: part 1 - the state of play
Investors and credit rating agencies (CRAs) are ramping up efforts to consider environmental, social and governance (ESG) factors in credit risk analysis.
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Thought leadership
Why ESG factors matter in credit risk analysis
Climate change, corporate scandals and the devastating effects of the global financial crisis are all stark reminders of why oversight, lack of transparency and accountability can negatively affect fixed income market pricing, volatility and, ultimately, financial stability.
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Thought leadership
Understanding credit ratings and ESG factors
It is important to understand what credit ratings actually measure, even if investors are familiar with credit rating agency rating scales: risks that affect fixed income instruments extend beyond credit risk, which is associated with the default probability of a borrower.
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Thought leadership
What rating agencies are doing on ESG factors
ESG factors are not completely new to credit analysis
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Thought leadership
How investors are approaching ESG factors and credit risk
A majority of PRI signatories say they use some form of ESG approach when investing in FI instruments, but ESG consideration is still far from being an integral element of the credit assessment process.
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Thought leadership
Materiality and visibility of ESG factors in credit risk analysis
Many investors believe that CRAs should take a more proactive approach to highlighting ESG considerations in their analysis.
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Thought leadership
Environmental issues gaining traction
The COP21 Paris Agreement has contributed to renewed focus on environmental factors. Climate-related risks could diminish or increase, depending on how countries implement legislation and policies to fulfil their nationally determined contributions to reduce greenhouse gas emissions.
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Thought leadership
Communication and transparency
Many of the hurdles in the way of systematic and transparent incorporation of ESG factors in credit ratings and analysis can be ascribed to how credit risk-related information is conveyed.
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Thought leadership
TCFD Recommendations: Country reviews
The PRI and Baker McKenzie undertook a review during mid-2017 of how the TCFD’s voluntary recommendations integrate into existing regulation and soft law in Brazil, Canada, the EU, Japan, the United Kingdom and the USA.
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Thought leadership
TCFD Recommendations: Country reviews – European Union
Particularly for asset managers and institutional investors, EU rules will increasingly require entities to assess climate-related risks to assets and businesses, as both financial and non-financial factors.
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Thought leadership
TCFD Recommendations: Country reviews – Japan
This review concludes that there is scope for Japan to work towards a stronger disclosure regime, such as that identified by the TCFD under its recommendations.
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Thought leadership
TCFD Recommendations: Country reviews – UK
This review concludes that the UK’s existing regulation on disclosure is comprehensive and that (unlike many other developed nations) it integrates, to some extent, sustainability risks into the broader financial risk analysis and disclosure framework.
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Thought leadership
TCFD Recommendations: Country reviews – US
This review concludes that consideration and implementation of a structured and detailed framework consistent with the TCFD’s recommendations is likely to assist US companies in understanding the ideal scope of their disclosures and to integrate climate risk awareness into their businesses, and their financial filings.
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Thought leadership
TCFD Recommendations: Country reviews – France
The French strategy has been to take small steps to give enough time to all actors to implement climate disclosure.
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Thought leadership
TCFD Recommendations: Country reviews – Canada
This review concludes that a strong disclosure regime such as that identified by the TCFD under its recommendations would assist materially in ensuring climate risk mitigation in Canada.
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Thought leadership
TCFD Recommendations: Country reviews – Brazil
This review concludes that there is scope for Brazil to work towards a stronger disclosure regime, such as that identified by the TCFD under its recommendations.
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Thought leadership
Fiduciary duty in the 21st century: South Africa roadmap
As a step towards implementing Fiduciary duty in the 21st century’s recommendations, the South Africa roadmap sets out recommendations in four categories: regulatory guidance, enhanced stewardship, investor education and corporate reporting.
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Thought leadership
Fiduciary duty in the 21st century: Japan roadmap
As a step towards implementing Fiduciary duty in the 21st century’s recommendations, the Japan roadmap sets out recommendations in five categories: stewardship and engagement, corporate governance, ESG disclosure and guidance for pension schemes, corporate disclosure and asset owner leadership.
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Thought leadership
Fiduciary duty in the 21st century: Brazil roadmap
As a step towards implementing Fiduciary duty in the 21st century’s recommendations, the Brazil roadmap makes recommendations in five categories: regulatory action, investor education, corporate reporting, stewardship and engagement and industry guidance.
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Thought leadership
Incorporating responsible investment in hedge funds
Investors are beginning to incorporate responsible investing criteria in their hedge fund allocations. Forward-thinking hedge fund managers already apply responsible investment practices and some have done so for years.
