Fitch Ratings announced today its launch of sector-based and entity-specific "ESG Relevance Scores" across all asset classes, starting with over 1,500 non-financial corporate ratings (available initially via login here), to be followed by banks, non-bank financial institutions, insurance, sovereigns, public finance, global infrastructure, and structured finance. The scores - which reportedly don't weigh in as to whether particular ESG practices are good or bad - publicly disclose how ESG issues are relevant and material to (and thus affect) individual credit rating decisions.
Fitch Ratings Global Head of Sustainable Finance Andrew Steel elaborated:
We actively engaged with investors and other market participants to understand what they want to see from credit rating agencies before devising the new relevance scores. Our focus is purely on fundamental credit analysis and so our ESG Relevance Scores are solely aimed at addressing ESG in that context. The scores do not make value judgements on whether an entity engages in good or bad ESG practices, but draw out which E, S, and G risk elements are influencing the credit rating decision. We have taken a fully integrated approach to ESG which will see the scores being done by our existing analytical teams rather than centrally.
According to the release, initial results show that 22% of Fitch's current corporate ratings are being influenced by E, S or G factors, with just under 3% of rating changes having resulted from a single E, S or G sub-factor.
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