Last week, Fitch Ratings announced the launch of a new ESG rating system, which aims to use a “clear methodology[y]”, a “comprehensive assessment of ESG performance” which “allows[s] for detailed comparability. This announcement builds on Fitch’s previous work over the past two years, including the “2019 launch of Fitch Ratings’ ESG Relevance Scores, which show the impact of ESG factors on credit rating decisions.” . Fitch is not alone in measuring ESG factors; the two other major rating agencies, Moody’s and S&P, have also launched products focusing on ESG issues (https://esg.moodys.io/; https://www.spglobal.com/esg/scores/).
This focus on ESG concerns by major rating agencies highlights the growing importance of ESG to investors and the general public, not just government regulators and activists. Indeed, it is the growing attention paid to ESG concerns by business entities that has likely prompted at least some of the current regulatory scrutiny by the SEC and other government agencies.
When considering a response to disclosure requirements proposed by government regulators, companies should also keep in mind and take into account the information that the market itself requires. This new focus on ESG concerns does not appear to be dissipating in the near future.
Fitch Group today announced the launch of Sustainable Fitch, which will offer a full range of ESG rating products at the entity and instrument level for all asset classes globally. Coverage of ESG ratings will initially focus on the ESG labeled market, but will eventually include the entire fixed income investment universe. Durable Fitch believes it can offer the widest coverage from a single provider in the ESG information market. Sustainable Fitch’s new ESG Ratings assess the ESG performance and profile of entities and instruments. They are backed by clear methodologies, with source data derived using the same principles and trust platforms that underpin Fitch credit ratings. They provide an objective and comprehensive assessment of ESG performance at the entity, instrument and framework level, enabling detailed comparability.