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Greater Disclosure. Enhanced Transparency

ESG in Credit Ratings

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Our Criteria - ESG Principles In Credit Ratings


In our ESG credit ratings criteria “Environmental, Social, And Governance Principles In Credit Ratings”, October 10, 2021, we articulate the principles that S&P Global Ratings applies to incorporate environmental, social, and governance (ESG) credit factors into its credit ratings analysis. In that criteria we define ESG credit factors as those ESG factors that can materially influence the creditworthiness of a rated entity or issue and for which we have sufficient visibility and certainty to include in our credit rating analysis.  We note that when sufficiently material to affect our view of creditworthiness, ESG credit factors can influence credit ratings.

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Transparency in Credit Ratings


In  our ESG credit ratings criteria “Environmental, Social, And Governance Principles In Credit Ratings”, October 10, 2021, we articulate the principles that S&P Global Ratings applies to incorporate environmental, social, and governance (ESG) credit factors into its credit ratings analysis. In that criteria we define ESG credit factors as those ESG factors that can materially influence the creditworthiness of a rated entity or issue and for which we have sufficient visibility and certainty to include in our credit rating analysis.  We note that when sufficiently material to affect our view of creditworthiness, ESG credit factors can influence credit ratings.



In our commentary "ESG Credit Indicator Definitions And Application," published Oct. 13, 2021, we discuss the introduction of ESG credit indicators as a complement to our existing Credit Rating analysis.  Whereas our ESG Criteria seek to enhance transparency in how and where we capture ESG factors in credit ratings, our ESG credit indicators provide additional disclosure by reflecting our opinion of how material the influence (on a 1-5 scale) of ESG factors is on our credit rating analysis.  We assess these indicators on a net basis meaning that we take a holistic view of exposure to environmental, social and governance factors and related mitigants on the credit rating analysis. They are applied after the rating has been determined. They are not a sustainability rating or an S&P Global Ratings ESG Evaluation.*

Accordingly the application of--or change of--an ESG credit indicator cannot in itself trigger a credit rating or outlook change. However, the impact of ESG factors on creditworthiness could contribute to a rating action, which in turn could lead to a change in the ESG credit indicator. Through the release of ESG credit indicators, we aim to further delineate and summarize the relevance of ESG factors to our credit analysis by isolating our opinion of their credit influence and separating it from the non-ESG factors affecting the credit rating.


ESG In Our Ratings



* ESG credit indicators are separate and distinct from S&P Global Ratings ESG Evaluations. An S&P Global Ratings ESG Evaluation is not a credit rating or component of our credit rating methodology. Rather, it indicates our view of an entity’s relative exposure to observable ESG-related risks and opportunities, and our qualitative opinion of the entity’s long-term sustainability and readiness for emerging trends and potential disruptions. Moreover, the ESG Evaluation considers the impacts and dependencies o the environment and society across the value chain for a wide range of stakeholders, regardless of current credit materiality. (For more information on ESG Evaluations see Environmental, Social, And Governance Evaluation Analytical Approach, Dec. 15, 2020.)

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ESG Credit Indicator Sector Reports


Listed below are our ESG Credit Indicator Sector Reports.

We are disclosing in these reports our ESG credit indicators for the sectors listed below. Our ESG credit indicators provide additional disclosure and transparency at the entity level and reflect our opinion of the influence that environmental, social, and governance factors have on our credit rating analysis. They are not a sustainability rating or an S&P Global Ratings ESG Evaluation.

ESG Credit Indicator Sector Report
Corporates

Infrastructure

Banks & Insurance

Structured Finance

Materiality Maps


As ESG factors become integral considerations in the marketplace across many types of analysis, investors are seeking more and clearer information about what these mean, including their relevance and materiality. We believe the sector materiality map we propose, and the relationships it illustrates, can help investors better frame their own analysis of ESG materiality.


  
Corporate Materiality Maps

Infrastructure Materiality Maps