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S&P Global Ratings Removes ESG Credit Indicators from Reports, Emphasizes Detailed ESG Analysis

ESGS&P Global Ratings Removes ESG Credit Indicators from Reports, Emphasizes Detailed ESG Analysis

S&P Global Ratings will no longer include its ESG credit indicators, which summarize the impact of ESG factors on credit analysis, in its reports on rated entities. These alphanumeric indicators, introduced in September 2021, assessed ESG-related elements on a scale of 1 to 5. They were intended to complement qualitative insights on ESG factors’ effect on creditworthiness in credit reports. S&P now states that detailed ESG credit analysis within its rating reports is more effective in conveying information, reaffirming the importance of such narratives.

Last year, S&P faced investigation from Republican attorneys general, including Missouri’s Eric Schmitt, alleging politicization of financial analysis through ESG evaluations. Regulators worldwide have also scrutinized ESG rating providers for consistency and transparency. In response, the EU proposed supervision of ESG rating providers by ESMA in June, and the UK’s FCA introduced a draft Code of Conduct for ESG rating and data providers. Despite discontinuing ESG credit indicators, S&P maintains its ESG principles criteria and commentary on ESG’s impact on creditworthiness.

By FCCT Editorial Team

Disclaimer: The views expressed in this article are independent views solely of the author(s) expressed in their private capacity.

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