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ESG Round-Up: S&P CEO says ESG scores should consider both risk and impact

The latest developments in sustainable finance: Moody’s expands ESG scores to airlines, restaurants, and gaming; NGOs launch oil and gas exclusions tracker.

ESG scores which solely consider risk “do not support the basic principles of ESG investing”, the CEO of S&P Global has said. Writing in an open letter, Doug Peterson said that while it was prudent for ESG scores to consider risk, “it will be impossible for [them] to support progress on sustainability goals if measuring impact is not an integral part of an ESG assessment.” Peterson added that the current diversity in ESG scoring should perhaps be welcomed, as market participants often value a diversity of opinions to support their decision making, but said that scores and methodologies should be transparent to ensure there is clarity on where and why there are differences of opinion. 

In other ESG scoring news, Moody’s has expanded its ESG issuer profiles and credit impact scores to airlines, restaurants, and gambling companies across the world. ESG considerations have a negative impact on the credit scores across all three sectors, with airlines most affected by environmental and social considerations including transition risk and demographic and societal risk, while gambling companies are most affected by social and governance and restaurants are at risk from all three categories. McDonalds, Starbucks and Darden Restaurants – all investment grade issuers – are the only three companies in the sector with a neutral to low ESG impact on their credit rating, Moody’s said. 

A group of environmental NGOs including Reclaim Finance and Insure Our Future have launched an oil and gas policy tracker, tracking the oil and gas exclusion policies of 150 of the world’s largest financial institutions. The tool covers asset managers and owners, insurers and banks, and rates their commitments across new projects, expansion, phasing out and unconventional oil and gas. The only institution to be highlighted in the “best practices” section is France’s La Banque Postale. 

The New York City Comptroller has welcomed the Securities and Exchange Commission’s proposed carbon disclosure rules. In a statement, Brad Lander said that the rule will provide shareholders with “necessary decision-useful data” to assess climate-related financial risk, as well as encouraging companies to assess the threat posed by climate change. His office will submit comment to “support and strengthen” the rules in the coming weeks, he added. Mindy Lubber, CEO of environmental NGO Ceres, said that the proposal was “thoughtful”, and that it would enable the US to begin to catch up with other countries who have stronger disclosure rules.  

Marsh has launched a free ESG risk rating service for corporates, which rates a company’s performance across 18 ESG themes. Marsh said it anticipated that companies using the tool would be able to access better insurance terms from the market, and plans to publish aggregate data on company results across country and sector. Liberty Mutual clients in the US and Canada who opt in to the risk rating will be given free access to its advisory services for sustainability and climate risks.  

Swiss data provider SIX has announced a partnership with Sustainalytics to offer datasets on the EU taxonomy and SFDR, including on principal adverse impacts, to its customers. The partnership, the first that SIX has signed with a third party specialist ESG data provider, will also see clients given access to Sustainalytics’ ESG risk ratings.