ESG Risks Should Translate to Credit Rating Action, UN PRI Says

ESG factors are affecting credit risk and rating companies should start translating that into their rankings, according to the UN Principles for Responsible Investment.

The impact of certain environmental and social issues, such as climate change or biodiversity loss, on credit quality in the long term remains unclear, the group said in a report Thursday. Added to that, comparison between borrowers is challenging as the standard and availability of ESG data is patchy, creating a need for more engagement between agencies, investors and issuers, it said.

“Rating agencies must go beyond better signposting and translate it into credit action,” said ...