• Gustavo Bernal Torres

Credit Worthy: ESG Factors and Sovereign Credit Ratings

A new report from the World Bank looks at how and which ESG factors apply to sovereign fixed-income assets; and the role of credit rating agencies in assessing materiality.

  • Our analysis to date highlights the “unique” nature of the sovereign debt asset class from an ESG perspective, largely driven by the complex nature of a sovereign nation, in particular compared to a corporate entity.

  • This paper focuses on sovereign credit ratings and empirically assesses how broad sovereign ESG factors—as well as the ESG factors specific to a country’s national wealth and management of risks and opportunities related to so-called stranded assets like fossil fuel resources—are manifested in sovereign credit rating assessments.

Source: https://documents1.worldbank.org/curated/en/812471642603970256/pdf/Credit-Worthy-ESG-Factors-and-Sovereign-Credit-Ratings.pdf


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