Fitch Ratings Introduces ESG Scores

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Stockholm (NordSIP) – On January 7, global rating agency Fitch Ratings launched a new integrated scoring system which highlights how ESG factors impact individual credit rating decisions. The new “Relevance Scores” are produced by the firm’s analytical teams and are both sector-based and entity-specific.

In this first phase, Fitch has launched the new rating with over 1500 non-financial corporate ratings, across asset classes. Ratings on banks, non-bank financial institutions, insurance, sovereigns, public finance, global infrastructure and structured finance will follow.

- Promotion -

The rating agency is taking a particularly open approach to fill an existing gap, it claims in its press release. “Fitch’s ESG approach fills a market gap by publicly disclosing how an ESG issue directly affects a company’s current credit rating. Fitch is the first credit rating agency (CRA) to systematically publish an opinion about how ESG issues are relevant and material to individual entity credit ratings. Fitch is initially making all of its ESG Relevance Scores available in the public domain, and will then maintain and publish the scores on an ongoing basis as an integrated part of its entity credit research.”

More specifically, the aim Fitch’s Relevance Scores is not to provide information on the sustainability of a company’s activities. “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,” says Andrew Steel, Global Head of Sustainable Finance at Fitch Ratings.

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