Report: Can credit rating assessments and sustainability coexist?
I thought I'd share this report with all of you from the Institute for Energy Economics and Financial Analysis issued in March this year.
Not so long ago we had an interesting discussion threads here initiated by community Champion and member Katy Husband on "How regulated should ESG ratings markets should be"?
Adding somewhat to this discussion, this study found that credit rating agencies, following their mandates, do not make value judgement, but rather how ESG factors impact creditworthiness. Thus, companies that are negatively impacting the environment will continue to be highly rated. On the other hand, sustainable companies will not receive a rating uplift despite its decarbonization.
Question to the community:
Where do you stand on this and what changes do you think need to happen to make sure that ESG factors are truly integrated into traditional credit rating methodology?
------------------------------
Aya Pariy
------------------------------