India-based ratings, research, risk, and policy advisory services provider and S&P Global company CRISIL Ratings announced today it will begin disclosing the impact of ESG parameters when assigning credit ratings.

According to CRISIL, the initiative comes as the consideration of ESG factors take on increasing importance in the decision-making process of investors, and as investors begin to screen opportunities through an ESG lens.

While CRISIL noted that sustainability-related factors are already integrated into its credit assessments, under the initiative will now assess and disclose the impact of ESG factors on companies’ credit risk, utilizing a proprietary framework that weighs sectoral impact on environmental and social factors, and the relative performance of a company on ESG aspects.

Gurpreet Chhatwal, Managing Director of CRISIL Ratings, said:

“ESG-readiness is becoming an important distinguishing feature for corporates to access funds from the capital market. Given this, and the improving disclosures on ESG parameters, we will assess — and make known — their impact separately when assigning credit ratings.”

CRISIL said that its ability to provide ESG assessments will depend on the availability of ESG information, noting the early steps being taken in India to improve sustainability-related reporting, including the pending introduction of mandatory non-financial disclosures for the largest publicly traded companies.

Rama Patel, Director, CRISIL Ratings, said:

“We will call out the impact of ESG on credit ratings for listed corporates that publish their ESG data, and lean on the capital markets and foreign investors for funding requirements. Over the medium-term, as ESG disclosures improve and get integrated more and more into investment and lending decisions, CRISIL Ratings will expand its scope to assess and disclose ESG impact on more companies.”

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