ESG Is Increasingly Important in Credit Ratings, Moody’s Says
- Climate change takes greater prominence for rating agency
- Moody’s cited ESG in a third of its rating actions last year
Workers on the assembly line at the Ford Dearborn Truck Plant in Michigan. Carmakers had the highest proportion of ratings action citing environmental considerations, followed by coal mining, coal terminals as well as regulated electric and gas utilities with generation.
Photographer: Bill Pugliano/Getty Images
Moody’s Investors Service is paying more attention to environmental and social issues when assessing companies’ risk as the financial impact becomes clearer. Climate and demographic change, as well as societal issues like income inequality, are increasingly highlighted, Moody’s analysts led by Robard Williams wrote in a report Monday.
“We expect ESG considerations to be of growing importance in our assessment of issuer credit quality,” the Moody’s analysts wrote. “While our ratings have always reflected our views of ESG risks, the materiality of key environmental and social issues continues to increase.”