Sustainable Investment Awards 2022

ESG research of the year, fixed income; Most transparent credit rating agency: Fitch

Fitch Ratings picked up the ESG research of the year award (fixed income) on its way to also securing the Most transparent credit rating agency (CRA) award for the fourth year in a row.

Andrew SteelSustainable Fitch global head Andrew Steel told Environmental Finance that ongoing recognition for sustainable credit transparency has been driven by its ESG Relevance Scores (ESG.RS) and recent roll-out of interactive ESG dashboards.

"Our ESG.RS and interactive dashboards enable investors to explore individual ESG issues, rather than just entities, sectors or regions," he said. "We also provide quarterly updates on changes in ESG.RS across entities within asset classes and are currently the only CRA that aggregates this information."

Alongside the transparency award, Fitch also scooped the award for ESG research of the year for fixed income. Steel said this recognition followed the creation of its dedicated Sustainable Fitch arm in September 2021 which has allowed the credit rating agency to invest in bringing "additional granularity and clarity" to its ESG analysis.

"We've expanded our ESG research programme through Sustainable Fitch, including our ESG in Credit series, which focuses on individual environmental and social topics and takes a deep dive into relevance and materiality for credit as well as looking at investor- and data-driven approaches to these risk factors," he said.

Among the topics covered by its ESG in Credit series were reports on the potential credit implications for issuers from customer- and labour-related issues as well as energy management, biodiversity & waste, and air quality issues. Sustainable Fitch has also published research on how litigation is a growing ESG-related risk to credit profiles of firms, as well as the ESG risks and opportunities of artificial intelligence.

Steel said the creation of Sustainable Fitch reiterates its commitment to bringing the same "rigour, transparency and comparability" to ESG analysis and research as its core credit ratings and research has done for fixed income markets.

"We are very excited about the opportunities to not only continue to promote better understanding of the financial materiality of ESG risks to credit decisions on a value-neutral basis, but also to connect this with future climate change scenarios and an entity's ESG impact, performance and outcomes," he said.