Case Study — 8 Oct, 2021

Leveraging Analytical Insight to Inform a Company’s Net Zero Story

The Client: A waste management company with business activities across EMEA

Users: Executive management, investor relations, sustainability team, and treasury team

The increasing volume and complexity of waste associated with the modern economy is posing a serious risk to ecosystems and human health, according to the UN environment programme.1 Every year, an estimated 11.2 billion tons of solid waste is collected worldwide and decay of the organic proportion is contributing about 5 per cent of global greenhouse gas emissions. Minimizing waste generation and using waste as a resource are key strategies on the road to the circular economy, and are important environmental goals in Europe.

Sustainability is at the core of business strategy for this waste management firm. The company sought a service provider in the sustainable finance space that had deep sector knowledge and, by following an interactive process, could understand and effectively evaluate the firm’s climate-related activities.

Pain Points

We understand the company had been receiving ESG ratings that it believed didn’t adequately capture the company’s ongoing activities and longer-range climate strategy. The company looked to engage with a reputable firm in the ESG space that understood sustainable finance, and the waste management industry, to discuss broader issues that were not necessarily in the public domain. They were looking for an experienced, knowledgeable firm that could offer:

  • A forward-looking assessment of the company's ESG performance and preparedness for future risks and opportunities based on an interactive analytical process – to include qualitative as well as quantitative factors.

S&P Global Ratings met with the team to explain its suite of ESG-related opinions and assessments, and the company decided to undertake an ESG Evaluation. Following the analytical excellence demonstrated by S&P Global Ratings during the ESG Evaluation process, the company became interested in seeing what other sustainable finance services offered by S&P Global Ratings may help tell its ESG story. The dialogue remained open and Second Party Opinions were discussed as another way in which S&P Global Ratings could opine on how the company was planning to use, manage, and report on its issuance of sustainable debt.

This waste management firm prides itself on efforts it is taking to help move to a greener economy and was looking for a robust evaluation of its ESG strategy by a reputable firm that understands sustainable finance and sector-specific issues.

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Solution: An Independent View to Assess ESG Preparedness and Sustainability Alignment

S&P Global Ratings described its Sustainable Financing Opinions that would provide an independent view, that the company may use in communicating its sustainable financing and ESG efforts with all stakeholders, including investors and customers.

The company was already communicating its narrative through an ESG Evaluation assessment

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. It draws on insights from S&P Global Ratings' network of credit analysts, plus S&P Global Trucost’s product offering and information from public bodies and non-governmental organizations, such as the U.N. Principles for Responsible Investment and the Carbon Disclosure Project. Importantly, it captures details gained from face-to-face meetings with a company’s senior management to produce a final ESG Evaluation score and report, which is an aggregate of two components: ESG Profile and Preparedness. The first assesses an entity's current ESG risk exposure, and the second evaluates the ability to anticipate and adapt to emerging or long-term ESG risks, as well as the ability to harness ESG-related opportunities.

Now it could demonstrate issuance alignment with third-party principles

Second Party Opinions assess a sustainable finance framework or transaction – green, social, sustainability, or sustainability-linked – for alignment with third-party principles and guidelines: the International Capital Markets Association Green or Social Bond Principles, Sustainability Bond Guidelines or Sustainability-Linked Bond Principles, ASEAN Green Bond Standards, LMA/APLMA/LSTA’s Green or Social Loan Principles, or Sustainability-Linked Loan Principles.

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Key Benefits

The company engaged for both the ESG Evaluation and the Second Party Opinion. The company is benefiting from the opportunity to:

  • Work with a leading credit rating agency that is actively engaged globally with investors, intermediaries, and key market participants.
  • Capitalize on S&P Global Ratings global team of 1,500 credit ratings analysts and sustainable finance analysts who apply their sector and company expertise to assess an issuer’s sustainability strategy and financing frameworks
  • Effectively tell the ESG story about how the firm contributes to a sustainable future.
  • Demonstrate to stakeholders that sustainability practices are aligned with best market practices.
  • Quickly turnaround outputs to meet the pressing needs of the capital markets.

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1"Solid Waste Management," UN environment program, as of September 2021 at www.unep.org/explore-topics/resource-efficiency/what-we-do/cities/solid-waste-management. (opens in a new tab)