Are you concerned about greenwashing?

TRANSPARENCY MATTERS

Are you concerned about greenwashing?

Sustainable bond issuance including green, social, sustainability, and sustainability-linked bonds could now collectively exceed $1 trillion in 2021. However, a lack of consistency in instrument labelling and post-issuance disclosure has raised investor fears that sustainability claims made by issuers might be overstated or unreliable, also known as greenwashing.

Find Out More About Greenwashing

How do ESG factors affect credit ratings?

We’re determined to make the credit ratings process highly transparent and easy to understand. Start learning now.

1. We assess the materiality of ESG Factors.
We incorporate these considerations into our credit ratings methodology, which enables analysts to factor in short-, medium- and long-term impacts into their considerations at a number of points in their credit analysis.
Learn how ESG is incorporated in our credit rating methodologies
2. For decades, ESG has influenced our credit ratings.
That’s why they’ve long been considered in our rating outlooks. We’re open to explaining our process. Because in business and in life, transparency matters.
Learn how ESG factors impact creditworthiness

We assess the materiality of ESG Factors. Learn how it’s incorporated in credit ratings.

ESG credit factors are 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 incorporate ESG credit factors through the application of our sector-specific criteria when we think the ESG credit factors are, or may be, relevant and material to our credit ratings. ESG credit factors can be positive, neutral or negative to creditworthiness, depending on the entity being rated.

Whenever S&P Global Ratings takes a rating action – an upgrade, a downgrade, a CreditWatch, or an outlook change – we announce the change and the full analytical rationale to all market participants at the same time. The written rationale for the rating change will include the various factors we believe are affecting our forward-looking view of creditworthiness. When an ESG credit factor is driving credit quality, it’s outlined explicitly and transparently in our publicly available rating actions.

We believe that for credit ratings to be meaningful to market participants they should embrace and reflect ESG credit factors alongside other credit considerations, where material and relevant to creditworthiness. As the need for understanding the impact of ESG on debt issuers everywhere continues to grow, S&P Global Ratings is listening and responding by enhancing its focus on ESG, with greater visibility in our criteria and transparency in our publications.

ESG factors may play a prominent role in creditworthiness.

Credit ratings help foster the development and smooth functioning of capital markets. They are forward-looking independent analytical opinions on the capacity and willingness of an entity – such as a corporation or municipal government –to meet its financial obligations (to pay back debt and pay interest) in full and on time.

Environmental, Social and Governance (ESG) factors can – and do – influence credit quality, specifically, the capacity and willingness of borrowers to meet financial commitments. They have always played a prominent role in creditworthiness and, thus, in our credit ratings – even before the term ESG was coined more than a decade ago.