Earlier this month, the Financial Times reported that the Big Three credit rating agencies were continuing to make their move into the ESG marketplace via a number of concerted deals . This report falls directly in line with the analysis I developed in my recent book The Role of Credit Rating Agencies in Responsible Finance and in an article last year entitled Sustainable Finance Ratings as the Latest Symptom of “Rating Addiction” . As I will be producing a chapter for a book next year, with that chapter being entitled Sustainable Rating Agencies , it seems prudent to review the market and its developments. The FT begins by noting that Moody’s has been making particular waves in the marketplace, as they purchased a majority stake in Vigeo Eiris earlier this year , and followed this with the purchasing of Four Twenty Seven . In June, S&P published its first ESG evaluation – of the company NextEra Energy. The article goes on to discuss how experts believe the market for sus...

The two elements of today’s post are common subjects here in Financial Regulation Matters . There are a variety of posts concerning credit rating agencies, on account of it being this author’s specialism, whilst there are also a number of posts concerning sustainable finance, and the incorporation of Environmental, Social, and Governance (ESG) concerns into the financial process. In the author’s most recent book The Role of Credit Rating Agencies in Responsible Finance , the continued and concerted entry of the leading CRAs into the growing field of sustainable finance was analysed, with one of the overarching sentiments being that regulatory oversight would be needed, and be needed soon. The EU has attempted to rise to that challenge and recently responded to orders from the EU Commission to put together a regulatory agenda in this field with their ‘ Technical Advice ’ on the matter. In this post we will look at these developments. Released on the 18 th July, The European Secu...

In June of this year, this author wrote of the sale of the Green Investment Bank (GIB) to the Macquarie Group for £2.3 billion, something which had Conservative politicians rejoicing at the £160 million profit the sale generated for the public purse. However, the piece and the associated commentary was adamant that the sale represented the lengths to which the Conservative Government’s regressive commitment to short-termism could go, with the assertion being that Macquarie could not be relied upon to continue the positive work of the GIB or not bleed the organisation dry before it moved on. Although there are many instances of the Macquarie group portraying this negative aspect to capitalism, in this post we will focus on the latest example and revisit the decision of Theresa May’s government upon that basis. Before we revisit the sale of the GIB, assessing the latest example of the culture at the Macquarie Group will reveal for us the care and attention that the Conservative ...

Today’s post previews a forthcoming article by this author entitled ‘Sustainable Finance: Why the Formal Introduction of Credit Rating Agencies Should Serve as a Warning’, to be published in Financial Regulation International. A pre-published version can be found here and the purpose of this post is to introduce the article and some of the key concepts flagged within it. With the issue of sustainable finance coming to the fore in the public and investing consciousness, the increase in information asymmetry is sure to follow and, when it does, the door opens for the rating agencies to position themselves within the process. We have already discussed the agencies’ entrance into this arena before here in Financial Regulation Matters , however this need for the agencies has traditionally resulted in exploitation so, in that regard, the article looks at the possibility of this phenomenon repeating itself in this specific arena. The article begins by discussing how ‘sustainable fina...

On the 22 nd May here in Financial Regulation Matters , a recent article produced by this author and published in the International Business Law Journal was previewed regarding the leading credit rating agencies’ entrance into the sustainable finance market, with particular reference to their adoption of ‘Environmental, Social, and Governance’ (ESG) concerns into their rating portfolios. These concerns, which are aligned to the ‘ Principles for Responsible Investment ’ (PRI) initiative, are increasingly of pressing concern to investors and, as such, the rating agencies have responded by tentatively agreeing to factor these important principles into their rating methodologies. However, a report conducted recently by the PRI has concluded that there are ‘disconnects’ between investors and rating agencies, with particular reference to how both parties are factoring in these ECG concerns into their business. So, in this post, we shall focus upon this report and its findings and emp...

Today’s post looks at the news that a number of extremely large institutional investors have joined forces to call for action to be taken against the tobacco companies, all for the good of societal health. For this post, the focus will be on that particular call, but also on the development of institutional investors championing social causes on the back of a concerted call from their members, together with the relative success of investors and large firms that fully commit to that ideal. However, it is important to assess whether this move by the industry is genuine, or simply a reaction to societal pressure which, in turn, shields the investors and the financial sector moreover from criticism. In April of this year, it was reported that four major institutional investors – Axa, CalPERS, Scor, and AMP Capital – were calling on their fellow investors to publicly back efforts to divest from the tobacco sector, stating that they wanted other investors to join them in supporting ‘ ...

Today’s post previews a forthcoming article by this author, to be published in the International Business Law Journal , entitled ‘Credit Rating Agencies and Environmental, Social and Governance Considerations: A Long Road Ahead’ (the pre-published version can be found here ). In this post, the topics that the article focuses upon, as well as its conclusions, will be reviewed against a discussion regarding a particular movement that is currently gaining prominence within the world of big business. Briefly, the article is concerned with analysing the recent move by the leading credit rating agencies, in which they have pledged their support and apparent adherence to following the ‘ Principles for Responsible Investment ’ (PRI) initiative. Before assessing why the agencies have chosen on this particular course of action, the article introduces the PRI and its aims, with the intention of assessing whether the rating agencies, as we know them, seem to fit within similar ideals. The P...