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Environmental, Social and Governance - Defining Relevance to Credit

Fitch Ratings has launched a new integrated scoring system which shows how environmental, social and governance (ESG) factors impact individual credit rating decisions. We are the only CRA who currently offers this level of granularity or transparency about the impact of ESG on fundamental credit.
Read the Announcement | Read Our FAQ

Global Economic Outlook

Coronavirus Crisis Is Crushing Global GDP Growth

The coronavirus crisis is crushing global GDP growth according to Fitch Ratings in its latest quarterly "Global Economic Outlook" (GEO)."The level of world GDP is falling. For all intents and purposes we are in global recession territory," said Brian Coulton, chief economist at Fitch Ratings. We have nearly halved the Fitch baseline global growth forecast for 2020 - to just 1.3% from 2.5% in the December 2019 GEO. The revision leaves 2020 global GDP USD850 billion lower than in the previous forecast. 

Related Report: Global Economic Outlook

More on Coronavirus

What Investors Want to Know: ESG Relevance Scores for Corporates

22% of the U.S. Corporate portfolio is impacted by ESG risks as evidenced by elevated ESG Relevance Scores (i.e. ‘4’s or ‘5’s). Governance risks were the main driver for high ESG.RS followed by social risks. Governance issues related to ownership and financial transparency were most prevalent in the Natural Resources sector, while the Pharmaceuticals and Healthcare sector was most impacted by social issues related to societal and regulatory healthcare spending pressures.

Industry Faces Climate Transition Challenge

Industry faces climate transition challenges in the form of rising costs and likely accelerated regulation in 2020s, with industrial decarbonization being the next focus for regulators. Watch video in Spanish or in Chinese



Industry Faces Climate Transition Challenge

Special Report

Industry Faces Climate Transition Challenge

Industry faces climate transition challenge in the form of rising costs and likely accelerated regulation in 2020s. Industrial decarbonisation will be the next focus for regulators. Mitigating carbon emissions will be challenging and costly. 


Related webinar

Industrial Decarbonisation: Climate Transition Risk Analysis

Listen Now

Pre-Crisis Structured Finance Vintages Have Higher ESG Risk

The materiality of environmental, social and governance (ESG) factors on the ratings of global structured finance transactions, reflected by ESG relevance scores (ESG.RS) of '4' or '5', is greater for older vintage structured finance credits. Pre-financial crisis vintages, originated before 2009, are most influenced by negative ESG factors.

Highlight Report:
Where ESG Matters for Global SF and CVB Ratings - A Case Study 


ESG Monthly

Our new ESG monthly newsletter includes our global ESG perspectives across all rated sectors and countries, with commentary covering our views on ESG credit risk and the broader macro trends in ESG and the debt capital markets. 

Subscribe Now


ESG’s Growing Impact on Corporate Credit

On Demand


Please join Fitch Ratings for a conversation on the potential impact of sustainability issues on credit if ESG commitments turn into action. Mervyn Tang, Global Head of ESG Research, and Simon Kennedy, Head of EMEA Corporate Research, will discuss how banks and asset managers are considering ESG in their investment and lending decisions, focusing on the use of green bonds, negative sector screening, and thematic vs active ownership.

German 2030 Climate Package May Become Green Law Blueprint

Germany’s sweeping package of climate policy reforms may become the blueprint for an intermediate climate action step for many nations aiming to achieve carbon neutrality by 2050.



German 2030 Climate Package May Become Green Law Blueprint

German 2030 Climate Package May Become Green Law Blueprint

The German federal government's sweeping package of climate policy reforms may become the blueprint for an intermediate climate action step for many nations aiming to achieve their commitments on carbon neutrality by 2050. Any specific credit impact of this climate policy reform on rated entities will become clear when detailed information on sectoral and regional legislation, programmes and policy decisions becomes available.


Fitch Ratings Named Best ESG, Investment Grade, Public Finance and Sovereigns Agency

Fitch Ratings has been recognised by The Asset as the Credit Rating Agency of the Year (2019) in four categories. This includes a first-time win in the publication's Triple A Award for ESG, a back-to-back award for Investment Grade, the third award in a row for Sovereigns and the fifth consecutive win for Public Finance.

ESG Trends in Credit 2020

Sustainability issues could have an impact on credit profiles if ESG commitments translate into action. Fitch has identified six key environmental, social and governance (ESG) trends for 2020 that are relevant to credit ratings, supported by Fitch's proprietary ESG Relevance Scores as well as research and insights from over 1,400 credit analysts in 30 countries


Read the Report: ESG Credit Trends 2020

Fund Managers' ESG Focus Adds to Corporate Financing Risks

Increased adoption of environmental, social and governance (ESG)-oriented investment strategies among global investment managers could gradually increase funding costs for certain corporate sectors, Fitch Ratings says. It could also put pressure on companies to improve disclosures, and increase the likelihood that ESG-related shareholder motions are passed.

Global Wildfire Risk Illustrates ESG Factor Relevance for Credit

Recent catastrophic wildfires in Australia and California underscore the importance of environmental considerations when evaluating the credit quality of utilities.

Related Report:
Global Wildfire Risk Illustrates ESG Factor Relevance for Credit

outlooks 2020

Credit Journal: 2020 Credit Outlooks

Our Credit Journals are a curated compilation of Fitch Ratings’ in-depth research and commentary. This special edition covers our global sovereigns and macroeconomic credit outlooks for 2020.

Download the 2020 Credit Outlooks edition.

Fitch Ratings Publishes ESG Sector Template Compendium

Fitch Ratings has published a compendium that contains 82 of its unique environmental, social and governance sector templates, used by credit analysts across analytical groups in their assessment of an entity, transaction or programme when assigning ESG Relevance scores.

ESG Has Growing Influence on Bank Lending to Corporates

Global banks are increasingly taking account of environmental, social and governance (ESG) factors in their underwriting processes. About half of the lending assets covered by the 182 banks that took part in Fitch's ESG survey in 3Q19 had been screened by the banks for ESG risks. 

ESG Webinar

Climate Policies and Carbon Pricing, what impact on Credit?

Please join us as our analysts discuss the new report: Regulatory Risk Amid Global Emissions Gap: Carbon Pricing. Fitch will be hosting two sessions for ESG webinars on this topic:

West Coast US & APAC (Listen here)
East Coast US and EMEA (Listen here


  • Andrew Steel, Managing Director, Sustainable Finance
  • Mervyn Tang, Senior Director, Sustainable Finance
  • David McNeil, Associate Director, Sustainable Finance

Regulatory Risk Increasing amid Global Emissions Gap

The global emissions gap between government pledges and actions increases the risk of a rapid increase in the scope of climate regulation. Most countries lag substantially behind their existing Nationally Determined Contribution pledges, let alone the emissions trajectories required to limit warming to 1.5C.

Lower Traffic Growth Key for Aviation CO2 Emission Cuts, but May Cause Sector Disruption

Pressure to decarbonise will continue to grow on the global airline sector, a large contributor to CO2 emissions. In Fitch Ratings’ view, reductions in net aviation CO2 emissions at the global and local levels are not achievable without a combination of prudent management of air traffic growth and financially demanding regulation to incentivise airlines to reduce emissions. We also believe it requires a consistent and coordinated global approach.

Governance Weaknesses Correlate with APAC Corporate Ratings

Potential corporate governance weaknesses largely correlate with an issuer's rating level, Fitch Ratings says in report published today that details the findings of a recent study of a large sample of APAC corporate ratings.

Global Banks Start to Embrace ESG in their Risk Management

Global banks are increasingly embedding environmental, social and governance factors into their risk-management frameworks, Fitch Ratings says in a new report. More than half the 182 banks that took part in Fitch's ESG survey said they incorporated ESG considerations "always" or "most of the time" into most of their risk-management processes.

Introducing our ESG Heat Map

Fitch Ratings has launched an ESG Heat Map, to provide further insight into the relevance of ESG factors to credit ratings. The map is designed to help users understand how relevant individual ESG topics are to credit ratings across different sectors.

Webinar on Demand

ESG Relevance Scores for Structured Finance & Covered Bonds – The Fitch Approach

Listen to Fitch Ratings content on demand for webinars which will outline Fitch’s recently launched ESG relevance scores for structured finance and covered bonds.

Listen Now
EMEA & Asia Session
Americas Session

Special Report

Introducing ESG Relevance Scores for Structured Finance and Covered Bonds

Fitch Ratings says social and governance risks have the most impact on its new environmental, social and governance relevance scores for structured finance and covered bonds (SF and CvB) ratings globally. Initial results show on aggregate 18% of transactions and programs across SF and CvB asset classes contain contributing ESG factors or credit rating drivers.

Demographic Risks on the Rise for Sovereign Ratings

Demographic trends such as declining or rapidly expanding populations, a bulging youth cohort or pronounced ageing can create risks to sovereign creditworthiness. Key channels of impact include stagnant potential GDP growth, unsustainable pension systems and public debt, and risks to social and political stability.

Fitch Ratings named 'Most Transparent Ratings Agency' by Environmental Finance

The winners are decided by an independent panel of ten or more institutional investors, reflecting the market's stamp of approval on Fitch's ESG Relevance Scores, launched in January this year to provide robust analysis of the influence of ESG factors on credit ratings.

Heightened Focus on Global ESG Risk for Money Market Funds

ESG investment considerations have become more integrated into money market funds in Europe and the US, with governance considerations having an important influence on the exclusion of potential investable assets. However, MMFs' core investment objectives of liquidity and preservation of capital have resulted in high-quality, low-risk investment profiles already aligned with ESG core investment objectives.

Financial Times: ESG money market funds grow 15% in first half of 2019

Coal Power Pressured Despite Affordable Clean Energy Rule

The US Environmental Protection Agency's new Affordable Clean Energy rule has a limited near-term effect on public power issuers and will not change the long-term pressure on most public power utilities to reduce carbon dioxide (CO2) emissions.

Clear Evidence of Sectoral, Regional ESG Credit Patterns

Fitch Ratings says that its analysis of ESG Relevance Scores shows clear evidence of sectoral and regional patterns for how environmental, social and governance (ESG) factors affect non-financial corporate credit ratings. 

Milken Institute Global Conference 2019 – Portfolio Risks: What Are You Ignoring?

Andrew Steel, Global Head of Sustainable Finance, joins other thought leaders to discuss the hidden risks that investors may not have assessed or priced when considering their portfolios at the 2019 Milken Institute Global Conference.

Introducing ESG Relevance Scores for Public Finance and Infrastructure

ESG factors generally have a low level of direct impact on public finance and infrastructure credit ratings. However, governance is the most influential ESG risk factor across the overall ratings portfolio. This was driven by public finance issuers, which is not surprising given that factors such as political stability, creditor rights, financial transparency, governance structure, government independence and control of corruption are important considerations in our credit rating process. 

Watch the VideoIntroducing ESG Relevance Scores - An Update for Public Finance and Infrastructure

China's Renewable Consumption Target Policy to Boost Volume and Enhance Returns

China's newly announced Renewable Power Consumption Target Policy will help to enhance the sector's volume visibility by specifying a target renewable-power consumption percentage for each province. Meanwhile, grid-parity projects could get additional income from selling green certificates. 

Financial Crime Compliance/Conduct Risk Drive High Financial ESG Scores

Financial crime compliance and conduct issues drive the highest impact Environmental, Social & Governance (ESG) relevance scores for bank credit ratings in developed markets, according to a new report that looks at specific financial institutions that have high ESG relevance scores (i.e. '4's and '5's). 

1Q19 Dashboard

Green Bond Fund Sector Maintains Strong Growth

Fitch Ratings estimates that European green bond fund assets under management reached EUR5.4 billion at end-December 2018, registering 83% growth from 2017. This compares with a 3% contraction in the European bond market overall in the same period. However, these funds remain tiny in the context of the broader fixed income fund market

Introducing ESG Relevance Scores for Sovereigns

Environmental, Social or Governance (ESG) factors impact the credit ratings of all Fitch-rated sovereigns, with governance the most important driver. All sovereigns have achieved the highest ESG Relevance Score of ‘5’ (highly relevant, key rating driver) on “Political Stability and Rights” and “Rule of Law, Institutional & Regulatory Quality and Control of Corruption” within the overall governance category.

Middle East in Ambitious Drive for Renewables Generation

Several governments in the Middle East have set ambitious targets for the development of renewable energy, which will give rise to large capital requirements in the region. The sovereign rating may be a critical factor in our assessment of credit strength of renewable projects due to the government-related entity status of many off-takers or entire projects. 

ESG Risk

Introducing ESG Relevance Scores for Financial Institutions

Nearly 20% of global financial institution ratings are currently influenced by governance risk according to an analysis of new Environmental, Social & Governance (ESG) Relevance Scores. ESG risks overall have a low level of direct impact on financial institution credit ratings. The scores cover over 900 banks, non-bank financial institutions and insurance companies around the globe. Download our ESG Financial Institutions special report to learn more

US Drug Prices Unlikely to Hurt Insurer/Supply Chain Margins

Changes currently being proposed concerning prescription drug rebates and pricing under Medicare/Medicaid are not expected to materially pressure margins or profits over the long term for U.S. health insurers, drug companies, distributors and PBMs (pharmacy benefit managers), Fitch Ratings says. 

What Investors Want to Know

Europe Nuclear Generators Most Exposed to Large One-Off Costs

European power generation companies, particularly nuclear power plants, are more exposed to one-off costs and subsequent negative rating impact from large, unanticipated events than regulated network companies. Insurance covers some risks but is unlikely to provide full-cost coverage in the event of extremely large accidents. 

Special Report

Electric Vehicle Growth Could See Oil Demand Peak By 2030

Electric Vehicle (EV) adoption is an increasing threat to oil demand, which could plausibly peak before 2030. This is not our core scenario, but developments in 2017 show how technological changes and greater product awareness could lead to annual sales of 10 million battery-powered EVs by 2025

What Investors Want to Know: ESG Relevance Scores

Read a special report on Sustainable Finance explaining how Fitch generates ESG Relevance Scores and how investors should interpret them.  

Webcast on Demand

Utilities’ Carbon Dioxide - Rising Cost Item for European Utilities

Fitch Ratings hosted a live webcast on utility companies’ CO2 cost exposure. The presentation will address the current CO2 pricing environment, the relative exposure of companies and countries in Europe, and the potential credit rating implications for Fitch’s portfolio. Listen on Demand

Governance Most Relevant of ESG Risks for Banks

ESG risks tend to have limited direct effect on bank ratings. However, more broadly, ESG factors influence rating decisions for a larger group of banks. For Fitch-rated global banks, 22% have ESG relevance scores that indicate ESG factors influence the rating ('4' or '5' on the 1-5 scale). 

China's EV Market to Sustain Rapid Growth Despite Subsidy Cuts

The Chinese government's recent sharp cuts to electric vehicle (EV) subsidies are unlikely to disrupt fast volume growth. We expect demand in the world's largest EV market to be supported by increasingly attractive product offerings, as well as wider commercial use of passenger EVs, in addition to a potential "pull-forward" effect in 2Q19.

Fitch Ratings Names Mervyn Tang Head of ESG Research

Based in Hong Kong, Mr. Tang will oversee a newly formed research team which will primarily focus on thematic and cross sector ESG research using both internal and external datasets.

Global Non-Bank Financial ESG Risk Mostly Governance

Governance tends to have a higher relevance for emerging market NBFIs versus developed market NBFIs, where it is often associated with the implementation and/or execution of corporate strategies and structures. Developed market considerations related to governance include complex group structures, key person risk and transparency.


ESG Relevance Scores for Financial Institutions

Our analysts from Insurance, Banks and NBFI, provided a detailed overview of our approach to ESG, our analytical framework, and the deliverables that are available to market participants. Listen on demand now

Enhanced Navigators

See the blend of credit and ESG in our enhanced Navigator reports for available sectors. 

Search Enhanced Navigators

Green Bond Funds: Mixed Climate for European Funds

Assets are up, but performance is down. For European green bond funds, 2018 was a year of achievements and setbacks


Australian and New Zealand ESG Relevance Scores Webinar

Andrew Steel, Global Head of Sustainable Finance, provided a detailed overview of our approach to ESG, our analytical framework and the deliverables that are available to market participants. Aggregate data on our rated corporate portfolio was also discussed during the webinar. Available now on demand


Introducing Fitch Ratings ESG Relevance Scores

The new ESG Relevance Scores transparently and consistently display both the relevance and materiality of ESG elements to the rating decision.



Understanding ESG Relevance Scores for Issuers

Learn more about our new ESG Relevance Scores in this two-minute walkthrough from our corporate analytical group. 

Higher Relevance Explained, Name-by-Name

In this introductory primer, we explain sector differences for each ESG risk element and summarise the rationals behind higher ESG scores on over 300 issuers:

Read the Corporate ESG Relevance Primer


Andrew Steel


Andrew Steel

Global Head of Sustainable Finance

+44 203 530 1596

Aymeric Poizot


Aymeric Poizot

Head of Investor Development

+33 1 44 29 92 76

Mervyn Tang


Mervyn Tang

Head of ESG Research

Sustainable Finance

+852 2263 9633

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