Capturing impact and controversies in private debt
Sustainable Fitch is tracking impact, checking for private debt controversies, responding to AI, and keeping a close eye on data quality, say Marina Petroleka and Gianluca Spinetti
Environmental Finance: How is the market for ESG data evolving, from the point of view of Sustainable Fitch?
Gianluca Spinetti: Without doubt, the market is changing. There has been something of a changing of the guard, with some repositioning, as well as some new entrants and some exits over the past two or three years. One of the drivers for that has been greater investor scrutiny around data quality and an emphasis on trusted data. This has been reinforced by greater attention by regulators to the market: from 2 July 2026, ESG ratings providers should be engaging with ESMA, the European Securities and Markets Authority, for example.
These two factors, we believe, play to the strengths of providers with a wide product offering. At Sustainable Fitch, we have an offering that ranges from the ESG ratings markets, through the ESG data space, the labelled bond universe, and into the private debt markets. And we place a high premium on the quality and trustworthiness of our data.
EF: Can you elaborate on your approach to data quality?
GS: To start with, technology is an enabler in our organisation, but it is not the “analytical machine”. We have over 100 analysts in Sustainable Fitch, and – while they use technology, AI, etc. to facilitate their work – all our insights, analysis and data are generated or reviewed by analysts.
We don't have black boxes that generate scores or data points. All of our data is transparent and traceable, so the users can see how we have created a score or extracted a data point.
On top of that, we leverage more than 100 years of the Fitch Group and the procedures and processes in place that provide solid safeguards for us to monitor and control the work we do.
EF: How is investor demand changing regarding ESG data?
Marina Petroleka: I would highlight two elements. First, there is increasing appetite among investors to consider bottom-up approaches to portfolio decarbonisation. Take transition pathways. Transition finance is a fledgling space, which requires new types of data and new ways of thinking, especially for more computational approaches. Investors are looking to do more nuanced, differentiated analysis between companies and their decarbonisation journeys – building portfolios not based on exclusions, using a total emissions budget, but by seeking out companies that they consider to have credible decarbonisation plans.
The second thing is how investors consume ESG data as they incorporate AI. There's a massive transition towards consumption through large language models and various embedded platforms that investment managers are building. The fundamental use case remains the same, but they are looking to receive data and insights through platforms such as Snowflake. We’re fortunate that we have a good technology team and that we are agile enough to ensure that we can meet clients where they are going.
EF: You’ve added screening and controversies to Sustainable Fitch’s leveraged finance ESG data offering. What insights has that generated?
MP: Our screening and controversies solution complements our existing ESG scores for leveraged finance, which cover around 1,800 borrowers and around 1,700 collateralised loan obligations. The new product not only differentiates our leveraged finance offering but is also highly intuitive and integrates very well within investment decision-making.
The screening data identifies issuer involvement in 37 controversial activities and 119 sub-activities, such as coal, tobacco, weapons and gambling, based on disclosed or Sustainable Fitch-estimated revenue exposure. Given that disclosure in private markets is limited, this can be challenging for investors to get visibility over.
The controversies component monitors 23 controversy types across areas such as human rights, labour rights, consumer interests, environment, and anti-corruption and governance.
The solution is exciting for us as analysts, as it has surfaced some interesting trends. For example, we found nearly 400 entities with some exposure to controversial activities – and this exposure is often not where might be expected. Most fossil fuel exposure, for example, is not to upstream producers, but is to be found in the value chain – in infrastructure, utilities or industrial companies. A simple sector-based screen would not capture the full exposure.
Meanwhile, what we’ve found with controversies is that reversibility (or otherwise) of harms is a critical differentiator. For example, the damages caused by a data breach or environmental damage might be impossible to reverse, meaning that even if the initial impact appears to be contained, it could compound over time.
EF: What immediate plans do you have at Sustainable Fitch for product development?
GS: A few things are brewing on our side. That said, on impact data, we are planning to release in the next few months standardised estimates for emissions footprints and avoided emissions associated with labelled instruments. So, in addition to having data ‘as reported’ from issuers’ impact reports, we will use standardised emission factors methodology to provide informed estimations.
Marina Petroleka is global head of research, and Gianluca Spinetti is global head of analytics, at Sustainable Fitch in London. For more information, see: www.sustainablefitch.com
