Mar. 28 2019 — S&P Global Ratings performed a two-year review of environmental, social, and governance (ESG) factors in our criteria and how they influenced, positively or negatively, the credit profile of our U.S. public finance (USPF) entities. These include local governments and states, as well as health care, housing, higher education, charter school, utility, transportation, and public power enterprises. From Jan. 1, 2017, to Dec. 31, 2018, we found that ESG factors were primary credit drivers in 34% of the total 3,315 USPF rating actions.
Governance and management issues, at 67%, were the most likely factor to lead to a rating action across sectors, although some sectors (such as public power, utilities, and transportation) were more sensitive to environmental issues as well. Social issues were a factor in about 28% of the rating actions we took. We believe this overall distribution could change as transparency and disclosure practices of rated issuers improve.
This report is part of a series covering the impact of ESG factors in S&P Global Ratings' credit ratings (see "Related Research" section for more information). It complements "Through The ESG Lens: How Environmental, Social, And Governance Factors Are Incorporated Into U.S. Public Finance Ratings" (published Oct. 10, 2018, on RatingsDirect) and our subsequent sector-specific publication "For Water Utilities, ESG Is Just Business As Usual" (published Dec. 12, 2018), both of which highlight ESG factors in our USPF criteria.