Credit Rating Agencies and Environmental, Social and Governance Considerations : A Long Road Ahead

Recently, the leading Credit Rating Agencies vowed to embrace the initiative developed by the ‘Principles for Responsible Investment' organisation to incorporate environmental, social, and governance factors into their ratings in a ‘more systemic way'. In this short note, the focus will be on the reasons for why this initiative is being developed, and some of the potential outcomes. Ultimately, it is suggested that the Big Two rating agencies are incorporating such initiatives in name only, and in actual fact the rest of the industry has been actively developing these principles but have been met with stiff resistance from regulators and the leaders of the oligopoly