Sustainable Fitch's reviews, ratings and impact assessments now cover the entire labelled debt investment lifecycle – from issuance to impact. Qirat Abdullah, Richard Jefferies and Reshma Kulkarni explain

Environmental Finance: How is investor demand for ESG ratings in the labelled debt market evolving, and how are you responding at Sustainable Fitch?

Reshma Kulkarni: Investor demand is becoming much more specific and differentiated. Different portfolio managers require different types and depth of ESG data.

We provide over 500 data points per instrument, including details such as look-back period, financing/refinancing, exclusions, taxonomy alignment, etc., and we increasingly work closely with investors to align and derive outputs that match their specific needs. This might include supporting them in mapping use of proceeds to their internal classification frameworks or individual exclusions, such as nuclear or gas, for example.

We are also seeing a shift in how data is consumed, with growing demand for flexibility and interoperability. We are actively integrating our data across multiple channels, including platforms like Snowflake, an enterprise cloud platform which aggregates data, as well as enabling AI-driven applications.

Overall, the shift is from static ratings to flexible, decision-useful data embedded directly into investor workflows, and our approach is to meet investors where they are, both analytically and technologically.

EF: How does your analysis evolve across the different stages of issuance, and how does it support investment decision-making throughout the process?

RK: We recently launched the Primary Market Review, which is produced within two hours of issuance, because that's the time that investors need to make a buy decision. These reviews are supported by existing ratings we have for the issuer, we already know where the EU Taxonomy analysis is likely to land, and we provide a snapshot of what the impact is likely to be.

In the post-investment phase, portfolio managers use our full ratings data, updated to reflect the allocations from the bond, thereby providing a more granular view of actual environmental and social performance, rather than just framework intent.

Our data then supports ongoing portfolio management, where investors use it for monitoring and reporting, including alignment with the EU Taxonomy and the Sustainable Finance Disclosure Regulation, and to assess whether performance continues to meet internal requirements. Importantly, it also enables action, including informing divestment decisions where allocation or performance falls short.

EF: What are the major issues with ESG impact data reporting, and how do you address them at Sustainable Fitch?

Qirat Abdullah: The major issues are a lack of standardisation and consistency, difficulty aggregating raw data into comparable metrics, and challenges in attributing impact accurately when reporting is done at the portfolio rather than the instrument level.

At Sustainable Fitch, we measure impact by starting with issuer-reported data for green, social and sustainability bonds exactly 'as reported', before enhancing it through an analyst-driven process that standardises units, classifies metrics and applies transparent calculations so outcomes can be compared consistently across issuers, sectors and timeframes.

A key part of the methodology is identifying whether impact is disclosed at the portfolio or instrument level and, where needed, pro-rating results by outstanding volume to attribute impact accurately at the individual bond, or ISIN [International Securities Identification Number] level.

We then integrate this into our product suite through the Impact Metrics for Labelled Bonds dataset, which gives clients comprehensive, traceable impact data with direct source links, derived comparison fields such as impact per €1 million invested, and portfolio-level tools that support ESG, regulatory and stakeholder reporting. Delivered via API [application programming interface] feeds and Excel, the dataset is designed to make impact data easier to use, more comparable and more decision-ready for investors.

EF: What would you say differentiates your impact product?

QA: Our impact data is built on an analyst-driven approach that helps ensure accuracy and reliability, combining advanced technology with manual checks to keep information as current and comprehensive as possible. The offering goes beyond raw data by adding an analytical overlay through standardisation, classifications and calculations, while capturing all reported impact indicators in a comprehensive way. Clients also benefit from dedicated analyst support to help interpret and understand the data. Coverage is broad across issuers, regions and bond types, including 98% of the MSCI Green Bond Index and 98% global coverage of labelled bonds across financial institutions, corporates and sovereigns, supra-nationals and agencies.

EF: Sustainable Fitch has particular expertise in ESG scoring for leveraged finance instruments. What makes the leveraged finance universe particularly challenging from a sustainability data perspective?

Richard Jefferies: The market varies between larger companies with strong disclosure and private companies that make minimal disclosures. That opacity is precisely why analyst-led assessment matters if you want to compare issuers in a consistent way: relying on issuer disclosure alone leaves too many gaps for any meaningful, like-for-like comparison.

Investors have historically struggled to benchmark collateralised loan obligation strategies against one another, with each manager applying its own proprietary sustainability methodology. Our absolute 0–100 framework supports consistent threshold-setting and classification, while analyst collaboration helps managers apply criteria consistently across restructurings, refinancings and new additions. The goal is a repeatable, defensible process rather than a one-time snapshot.

EF: Can a sustainability score genuinely capture something meaningful for a typical leveraged finance issuer, especially where underlying data isn't reported?

RJ: This is where methodology design is critical. Our entity scores assess business activities, weighted by revenues, referencing environmental and social impact alongside a measure of governance, through direct analyst evaluation. Where Principal Adverse Indicator datapoints aren't self-reported, we apply structured estimation methodologies calibrated to issuers in this market, so clients receive complete, regulatory-aligned coverage instead of data gaps. Data is available across multiple delivery options, including API and Snowflake, enabling seamless ingestion into internal systems and AI-driven tools.

EF: How does screening and controversy monitoring work across such an opaque universe?

RJ: We built on the experience of providing scores for this universe, where issuers don't always surface information themselves, to develop this dataset. Our analysts actively monitor developments across the leveraged loan universe, flagging material controversies and triggering score reviews. For investors running Article 8 strategies, that ongoing vigilance is as important as the initial assessment.

Qirat Abdullah is an associate director, ESG product development, Richard Jefferies is managing director and global head of leveraged finance at Sustainable Fitch in London, and Reshma Kulkarni is senior director and head of Americas for Sustainable Fitch's Ratings and Opinions, based in Toronto.

For more information, see: www.sustainablefitch.com