ESG principles applied in forming the system of international ratings

Abstract

The relevance of the study of international credit ratings taking into account the ESG principles in the era of increasing epidemiological risks is considered within the current situation in society, namely the significant impact of COVID-19 on all sectors of social and economic development. This shows the urgency of a systematic justification of current trends and peculiarities of international credit ratings, paying attention to the COVID-19 situation and ESG principles widespread. The above-mentioned aspects define the purpose of our study. The theoretical basis of our study was the analysis of the specifics and highlighting the principles of ESG, which take into account environmental, social and managerial factors, their impact on society during the coronavirus crisis. The article examines the history of international credit ratings and the basis for their transformation. In particular, the specifics of international credit ratings of Fitch Ratings, Standard & Poor's, Moody's and the specifics of their development, taking into account the principles of ESG, are considered. Fitch is determined to measure individual financial / debt instruments and the entity's socially responsible activities. Moreover, the assessment is conducted with an emphasis on environmental, social and managerial profiles. The results of a survey of potential beneficiaries of ESG Ratings (Sustainable Fitch) allowed us to assess the importance of social, environmental and managerial profiles. Approaches to the comprehensive integration of ESG principles into Moody’s activities are revealed, which involves the transformation of the established risk assessment system. The analysis of the S&P ESG family of indexes showed the opportunities that S&P offers investors in the context of access to information about companies according to their ESG profile in the context of national and regional indices. The results of the study can be used in the process of further development of the theoretical foundations of social investment, in particular to determine the specifics of the integration of ESG principles in business. The practical value of the study lies in a comprehensive analysis of the potential for integrating ESG principles within international credit ratings. The research may be useful both in the context of developing finance and credit ratings policies and within developing investment strategies at the business level.