An ESG Evaluation is a cross-sector relative analysis of an entity’s capacity to operate successfully in the future and is grounded in how ESG factors could affect stakeholders, leading to a material direct or indirect financial impact on the entity.
ESG Profile
- Assesses exposure to observable ESG risks & opportunities
- Considers governance structure in mitigating risks & capitalizing on opportunities
Preparedness
- Assesses the capacity to anticipate and adapt to a variety of long-term plausible disruptions
- Disruptions not limited to environmental or social scenarios
ESG Evaluation Profile Factors
S&P Global Green Evaluation
Green Evaluation is an asset-level environmental credential which provides a more comprehensive picture of green impact and climate risk attributes.
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Provides a relative green impact score
Environmental performance data and analysis by Trucost
Provides a second opinion confirming alignment with Green Bond Principles 2019 and Green Loan Principles 2019
Consider a variety of environmental key performance indicators
Not limited to issuer self-labelled green bonds
Light touch approach to limit administrative burden
ESG in Credit Ratings
S&P Global Ratings has long considered Environmental, Social, and Governance (ESG) factors in its credit ratings, and we capture ESG factors in many areas of our methodology.
- ESG factors are most often considered in our assessment of the issuer’s Business risk (specifically, its competitive position); Financial risk (through our cash flow/leverage assessment and financial forecasts); and Management and governance.
- Our financial institutions analysis typically considers ESG factors in the context of the Banking Industry Country Risk Assessment (BICRA), risk position, and governance assessments.
- Our insurance methodology takes a similar approach to our corporate and bank criteria frameworks embedding the impact of ESG credit factors into several aspects of the overall rating process.
- Under our project finance methodology, ESG factors are most often analyzed in the context of a project's construction and operations phases.
- Structured finance vehicles typically comprise a pool of financial assets that generate cash flow over time. Our analytics focus on the following factors: the credit quality of the securitized assets; legal and regulatory risks; payment structure and cash flow mechanics; operational and administrative risks; and counterparty risks.
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Trucost SDG Evaluation
Trucost provides financial institutions, corporations, governments, and thought leaders with robust insight to fast-track ESG integration and identify sustainable growth opportunities. In addition to data, analytics, and insights; portfolio footprints and audits; and advisory services, Trucost offers a Sustainable Development Goal (SDG) Evaluation tool to enable companies to identify wider business risks and opportunities aligned with the UN SDGs.
- Provides a score of a company’s overall SDG performance and individual scores for each goal, including positive contributions towards the SDGs as well as negative impacts
- Compares a company’s performance relative to its sector and competitors
- Identifies the most relevant SDGs for a company, with prioritized risks and opportunities
- Conducts gap assessment of SDG investments