When ESG Credit Risks Affect Corporations: Potential, Materiality, and Mitigation
Environmental, social, and governance (ESG) risks are everywhere. But not all risks can nor should be incorporated in the credit profile of a company.As ESG credit risks gain more traction with debt investors and regulators alike, it’s important to understand and assess the impact they may have on a company. The existence of a potential credit risk may not be enough for it to have an impact on either the company’s credit rating or its profile.
In some cases, the risks to the financial health of a company are not material, given the size of the company. In other cases, the risk of the event has been anticipated and the potential impact has been fully mitigated.
DBRS Morningstar is a global credit ratings business with 700 employees in eight offices globally. DBRS and Morningstar Credit Ratings are committed to empowering investor success, serving the market through leading-edge technology and raising the bar for the industry.
Together, we are the world’s fourth largest credit ratings agency and a market leader in Canada, the U.S. and Europe in multiple asset classes. We rate more than 2,600 issuers and 54,000 securities worldwide and are driven to bring more clarity, diversity and responsiveness to the ratings process. Our approach and size provide the agility to respond to customers’ needs, while being large enough to provide the necessary expertise and resources. For more details visit us at dbrs.com.
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