Credit Assessment Scorecards with ESG Credit Metrics
Assessing ESG Factors in Credit Risk Analysis
S&P Global Market Intelligence’s Credit Assessment Scorecards provide a structured framework for assessing credit risk, generating credit scores that are designed to broadly align with credit ratings from S&P Global Ratings.[1] Our Scorecards enable ESG factors to be considered in credit risk analysis in a transparent and structured way, while working through the regular credit assessment process.
[3] S&P Global Ratings does not contribute to or participate in the creation of credit scores generated by S&P Global Market Intelligence. Lowercase nomenclature is used to differentiate S&P Global Market Intelligence PD credit model scores from the credit ratings issued by S&P Global Ratings.
Key Features
Methodological Transparency
A framework that reveals all risk factors, weights, benchmarks, and scoring algorithms.
Identification of Default Risk
Through a granular rating scale, along with the ability to perform sensitivity analyses, scenario analyses, and stress tests.
Technical Documentation
This describes the analytical/statistical processes used to develop the Scorecard, identifying the data used in its construction and providing testing performance results.
Scorecard Implementation
Scorecard implementation and application training workshops and ongoing analytical support enabling the team to benefit from the latest analytical trends.
How it Works
A Transparent and Systematic Framework for Considering ESG
Scorecards with ESG Credit Metrics are enhanced Scorecards that explicitly include ESG credit risk factors. These factors are considered in detail alongside the traditional credit analysis formalized in the Scorecards, enabling users to reflect the impact of material ESG factors on credit risk while working through the regular credit assessment process.
For each of the three ESG dimensions (environmental, social, and governance), key ESG credit risk factors are those that can materially influence the creditworthiness of an entity and for which there is sufficient visibility and certainty. Key ESG credit risk factors can have a negative or positive impact on credit risk, however, not all ESG factors correlate to ESG credit risk factors. For example, cement producers’ negative environmental impact is not generally considered credit negative.
ESG credit risk factors can be considered in several areas within the Bank and Corporate Scorecard framework, including management and governance, country and industry risk, competitive position, and cash flow/leverage.
A Transparent and Systematic Framework for Considering ESG
These Scorecards generate ESG credit metrics that quantify the impact on the final credit score of the ESG credit risk factors. The metrics are alpha-numeric quantifications of the expected impact and are shown on a scale from 1 to 5, with 1 being positive and 5 very negative. They are proving to be critical for addressing internal and external requirements.
Assess ESG Factors in Credit Risk Analysis with our Credit Assessment Scorecards
Proven Methodology
Leverage 150 years of S&P Global subject-matter expertise in credit assessment, ratings, sector specific knowledge, and ongoing research and development.
Complete Solution
Measure the default and recovery risk and provide credit professionals with the ability to score counterparties and facilities of any size, in any geography.
Ongoing Support
Supported by comprehensive and targeted training, ongoing methodology updates and maintenance, as well as analytical support and access to our analysts.
Consistency
Standardized and transparent structure allows for replicability year-to-year, analyst-to-analyst and easy auditability.
Aligned with Regulation
Aligned with Bank for International Settlements / International Financial Reporting Standards 9 (IFRS 9) regulation-widely used for more than a decade.
Transparency
In-depth model development and maintenance documentation helps you meet regulatory requirements.
Insights
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