S&P Launch Their Latest Move into the ESG Space


Today’s short post is a short report on the news that S&P Global have today launched their new ‘ESG Scores’ into the marketplace. The move is the latest by the leading credit rating agencies to stake their claim to the ever-growing need for ESG-related information.

The leading credit rating agencies, and the ‘Big Two’ of S&P and Moody’s have been making a concerted effort to increase the stake in the growing ESG-informational provider field. With S&P acquiring TruCost, and Moody’s acquiring Vigeo-Eiris, amongst other moves, the trajectory is perhaps set. I have argued elsewhere that this may result in particular outcomes for the current ‘sustainability rating industry’, and that trajectory is being proven all the time. Morningstar, earlier this year, purchased Sustainalytics outright. Moody’s acquired a majority stake in one of the oldest ‘sustainability rating agencies’ Vigeo-Eiris early last year. On top of acquiring TruCost in 2016, S&P followed that up with the acquisition of SAM (formerly known as Sustainability Asset Management). The deal saw S&P acquire the ESG Rating component of RobecoSAM, with the acquired entity taking the SAM brand whilst also allowing Robeco access to its data. One of the fundamental reasons for the deal was so that S&P could get hold of SAM’s sector leading Corporate Sustainability Assessment (CSA), which is ‘recognised as one of the most advanced ESG scoring methodologies’ and reviews more than 7,300 companies wordwide.

S&P, in its press release today, stated that the ESG Scores are based on the CSA and will be made available to the investment community via its flagship Xpressfeed data feed management interface. The Global Head of ESG at S&P was unsurprisingly pleased with the development, stating that ‘the S&P Global ESG Scores are driven by deep corporate engagement derived from private and public data, making the scores unique in the market today. For the first time ever, investors will have access to scores based on more than two decades of ESG expertise, a leading methodology centered around financial materiality, and a focus on forward looking sustainability metrics’. S&P conclude the press release with a declaration of its offerings to the marketplace, which now include these ESG Scores, its ESG Evaluation service, the S&P 500 ESG Index, and its Platts Energy Transition prices.

In an article that will be published soon, I argue that the inefficiencies which researchers have been consistently identifying in the sustainability rating space – too much divergence, no consistency, a lack of access to information, and too much competition – put the industry at a real danger of being swallowed up by the credit rating industry, which despite the many internal problems with the credit rating model, can offer solutions to the mainstream with regards to ESG and its incorporation. This news today only hastens that trajectory.

Keywords – ESG, Ratings, S&P, @finregmatters

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