“Fitch Ratings Launches ESG Relevance Scores to Show Impact of ESG on Credit” – Fitch Ratings – January 7, 2019

On January 7, 2019 Fitch Ratings “announced the launch of a new integrated scoring system that shows how environmental, social and governance (ESG) factors impact individual credit rating decisions. 

The new ESG Relevance Scores, which have been produced by Fitch’s analytical teams, transparently and consistently display both the relevance and materiality of ESG elements to the rating decision. They are sector-based and entity-specific. 

Using a standardised and transparent scoring system, Fitch is introducing ESG Relevance Scores across all asset classes, starting with over 1,500 non-financial corporate ratings. This will be followed by banks, non-bank financial institutions, insurance, sovereigns, public finance, global infrastructure and structured finance. The ESG Relevance Scores for Fitch’s non-financial corporate ratings are now available at www.fitchratings.com/site/esg. 

Fitch’s ESG approach fills a market gap by publicly disclosing how an ESG issue directly affects a company’s current credit rating. Fitch is the first credit rating agency (CRA) to systematically publish an opinion about how ESG issues are relevant and material to individual entity credit ratings. Fitch is initially making all of its ESG Relevance Scores available in the public domain, and will then maintain and publish the scores on an ongoing basis as an integrated part of its entity credit research.”

In September 2018, Fitch Group announced it had signed the United Nations-supported Principles for Responsible Investment (UN PRI), underlining its commitment to incorporating ESG issues into investment practice and developing a more sustainable global financial system. This followed the recent establishment of a Global Sustainable Finance group at Fitch. This newly-formed group is responsible for reviewing how ESG factors are incorporated into the credit rating process, for increasing the level of transparency around ESG analysis and more broadly for the development of products and services beyond credit ratings to support and meet the growing needs of investors in this sector.”

You may read the press release on the Fitch Ratings internet site.