S&P Global Credit Rating Agency gives up on assigning a number to ESG factors - switching to telling a story instead
From Wikipedia “S&P Global Ratings (previously Standard & Poor's and informally known as S&P) is an American credit rating agency (CRA) and a division of S&P Global that publishes financial research and analysis on stocks, bonds, and commodities.”
From here:
S&P Global Drops ESG Scores Amid Backlash to Corporate Wokeism | NTD
A short 2 minute video with an explainer for why one of the three top credit rating agencies in the world decided to drop environmental, social and governance (ESG) scores.
In short – too dependent on the political views of individuals in the agency (subjective) and interfere with the business objectives of the companies being rated.
S&P will use text to describe ESG instead.
“Patrick Welch, chief ESG and ratings policy officer at Kroll Bond Rating Agency, told Bloomberg that confusion is the likely chief culprit driving the change at rival S&P Global.
By using a five-point rating scale, “you’re putting one scoring system–an ESG one–inside another scoring system, which is the credit rating,” Mr. Welch told the outlet.
“It raises confusion—are you talking about financial risk to the company, or also its impact” on other factors like society and the environment? he questioned.
Tom Lyon, a professor at University of Michigan’s business school who has studied ESG ratings, told the Financial Times that ESG ratings are “not that reliable and they disagree.”
Mr. Lyon added that ESG ratings have been under attack by conservatives and congressional Republicans, while suggesting that S&P Global folded in the face of pressure to drop their use.”
Members of the Cult of Moloch can continue to get “scores” based on the political views of staff from the other two major credit ratings agencies – Moody’s Investor Services and Fitch. Good to know who is on board with the Cult, right?
Onwards
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