Fundamentals of ESG credit risk assessment

With the growing realisation that material ESG risks can be key credit rating drivers and can impact the creditworthiness of an issuer, the credit rating agencies are now committing serious resources to this endeavor. In fact, many ESG issues today lie at the intersection between credit risk and ESG risk and corporations need to be seen to be managing these risks proactively.

This course focuses on how and why more and more ESG issues are impacting on the credit outlook for all sectors. It considers the different approaches taken by the major credit rating agencies and demonstrates how ESG can be integrated into traditional credit analysis. Although the focus is mainly on the analysis of corporate credits, consideration will also be given to sovereign debt issuers.

COURSE AGENDA

ESG Integration into Credit Analysis

• Recognising and anticipating material ESG credit events
• Understanding corporate management’s approach to ESG risks
• ESG factors and credit spread analysis

ESG Material Mapping

• Assessing and mapping materiality
• What mechanisms link ESG performance to credit risk

ESG Credit Scoring Methodologies

• Pricing ESG risk in credit assessments
• ESG scoring approaches

Credit Rating Agency Approaches

• Comparing the different CRA approaches to ESG credit risk assessment