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New market offering seeks to improve transparency, disclosure and private-sector engagement with rising environmental, social and governance risk concerns.
S&P Global Ratings today launched its ESG
Evaluation — a new
benchmark that provides a cross-sector, relative analysis of an entity's
capacity to operate successfully in the future, grounded in how environmental,
social and governance (ESG) factors could affect its stakeholders and
potentially lead to a material financial impact.
Along with tools such as CSRHub’s ESGHubTM app and TruValue Labs’
this new offering augments the growing arsenal for investors concerned with
long-term performance. Separate from credit ratings, the ESG Evaluation is a
forward-looking, qualitative and data-driven assessment of an entity's ESG
performance and preparedness for future risks and opportunities that leverages
company engagement and our analysts' expertise.
"The ESG Evaluation aims to deliver a forward-looking view that sets a new
holistic benchmark in sustainability," said Michael Wilkins, managing
director and head of sustainable finance at S&P Global Ratings. "Leveraging our
global analysts' knowledge of companies and sectors, the S&P Global Ratings ESG
Evaluation takes a broad view of the impact of a company's ESG exposures on its
Currently, the ESG Evaluation is available for entities in the corporate,
infrastructure and selected public finance sectors (transportation and
power) in the US and globally (subject to certain regulatory
considerations). In the coming months, S&P Global Ratings says it expects to
roll out Evaluations for banks, asset managers, multilateral
institutions, public healthcare, water and sewer entities; and later,
to the insurance, social housing and education sectors.
"The ESG Evaluation was developed in response to demand from investors and
companies seeking in-depth sector and company analysis on an increasingly
important metric: the durability of an entity's environmental, social and
governance practices," said John Berisford, president of S&P Global Ratings.
"While the fixed-income market's heightened focus on ESG has only emerged
recently, ESG factors, where relevant, have long been considered in our credit
rating analyses and in our published research. So, in introducing this ESG
Evaluation, we are building upon a strong knowledge base of assessing the impact
of ESG factors on individual entities."
The ESG Evaluation draws on insights from S&P Global Ratings' network of credit
analysts, and data and information from Trucost and S&P Global Market
Intelligence, as well as public bodies and non-governmental organizations such
as the UN Principles for Responsible Investment and the CDP. Importantly, it also captures information gained from face-to-face
meetings with an entity's senior management to produce a final ESG Evaluation
score and report.
The final ESG Evaluation on an entity is an aggregate of two components: ESG
Profile and Preparedness. The first assesses an entity's current ESG risk
exposure, determined by a diagnostic review and macro analysis underpinned by
S&P Global Ratings' ESG Risk Atlas. The second evaluates not only the ability to
anticipate and adapt to emerging or long-term ESG risks, but also to harness
Enhancing the ESG Evaluation's analytical approach is S&P Global Ratings' newly
launched ESG Risk Atlas. This online infographic charts exposure to
environmental and social risk for more than 30 sectors and incorporates exposure
to natural disasters, corporate governance standards, and ESG-related
regulations to provide country scores. S&P Global Ratings will leverage analysis
from the ESG Risk Atlas to provide a sectorial and regional foundation for its
ESG Evaluation. Because industry and country risk factors are in ongoing flux, S&P Global Ratings says
the Risk Atlas will be a dynamic form of commentary that it revises in line with
its view of ESG risks and opportunities.
Published Apr 11, 2019 8am EDT / 5am PDT / 1pm BST / 2pm CEST