Factor ESG in Credit Risk Analysis

Are environmental, social, and governance (ESG) issues more essential to consider today as you evaluate the creditworthiness of companies across industries and geographies?

ESG investing is becoming mainstream, according to a survey1 of credit risk professionals around the world that we conducted at the end of 2019. Over 80% said ESG factors are integral to what they do today, or are playing a growing role in the credit risk area. In large part, this is being driven by heightened investor demand. 


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Access Powerful Toolsets that Account for ESG Issues

In today’s environment, an evaluation of customers, counterparties, and investments should consider ESG factors, since sustainability issues are of increasing importance and can affect a company’s creditworthiness.

Access valuable ESG and credit risk insights with RatingsDirect®. RatingsDirect on the Capital IQ platform is the official desktop source for S&P Global Ratings credit ratings and research. Now RatingsDirect includes S&P Global Ratings’ latest ESG Evaluation. This is a cross-sector, relative analysis of a company’s capacity to operate successfully in the future that considers how ESG factors could potentially lead to a material direct or indirect financial impact. The Evaluation scores a company on a range of ESG factors, plus considers its long-term preparedness to anticipate and adapt to a variety of plausible disruptions. A relative overall ESG score helps investors better understand a company’s strategy, purpose, and management quality, and enables comparisons to be made with sector peers and others.

Assess the climate exposure of your portfolios with Climate Credit Analytics, combining S&P Global Market Intelligence’s data resources and credit analytics capabilities with Oliver Wyman’s climate scenario and stress-testing expertise. Via a highly dynamic, sector-specific approach, Climate Credit Analytics enables counterparty- and portfolio-level analysis of climate-related financial and credit risks for thousands of public and private companies across multiple sectors globally. The capability is designed for risk managers, investment professionals, sustainability teams, and others to assess credit risks related to climate change and the transition to a low-carbon economy.


Transition Risk: Impact on Upstream Oil & Gas Sector

Source: S&P Global Market Intelligence. As of May, 8 2019

Consider ESG factors as you identify and manage potential default risks with our Credit Assessment Scorecards. The Scorecards are designed to assess private, publicly traded, rated, and unrated companies across a multitude of sectors, plus government entities. Now a number of Scorecards have been enhanced to include ESG factors, enabling you to estimate their impact on credit risk while working through the traditional credit assessment process.

1ESG Investing is Becoming Critical for Credit Risk and Portfolio Management Professionals. S&P Global Market Intelligence. Date: 9 March, 2020.

2As of June 2020.


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