CRISIL Starts Disclosing ESG Impact on Credit Ratings

Published on: 17 January 2022 11:15 PM
by KnowESG

A Brief Summary

CRISIL, a rating agency based in India, said it would start disclosing the impact of ESG parameters when assigning credit ratings. The decision comes in the backdrop of ESG impact on investment decisions.

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According to CRISIL, the effort comes as ESG aspects become increasingly important in investors' decision-making processes, and as investors continue to analyse possibilities using an ESG lens.

While CRISIL noted that sustainability-related factors are already factored into its credit assessments, the initiative will now assess and disclose the impact of ESG factors on a company's credit risk, based on a proprietary framework that considers sectoral impact on environmental and social factors, as well as a company's relative performance on ESG aspects.

CRISIL stated that its ability to provide ESG assessments is contingent on the availability of ESG data, noting that India is taking steps to improve sustainability-related reporting, including the impending introduction of mandatory non-financial disclosures for the largest publicly traded companies.