Moody’s boosts green bond team, cites investor focus on ESG risk

Moody’s is allocating more resources to its Green Bond Assessment team as part of a broader expansion of its ESG capabilities, the rating agency announced on Wednesday, after it highlighted the growing prominence of ESG analysis amongst mainstream investors and policymakers.

The rating agency cited the Principles for Responsible Investment (PRI) commitment of more than 1,700 asset managers and owners who collectively manage over $68tr of assets to incorporate environmental, social and governance (ESG) issues into their investment analysis and decision-making processes.

“The expansion further supports our ongoing initiatives to enhance transparency with respect to the way we incorporate ESG issues into our ratings,” said Moody’s managing director, Brian Cahill. “Our efforts also align with our commitment to the UN PRI.”

The rating agency said Rahul Ghosh, a Moody’s senior vice president based in London, will contribute to Moody’s global green bond franchise and support broader ESG thematic research and outreach initiatives.

“Our credit ratings incorporate a forward-looking view of all issues that can materially impact the credit quality of a given sector or debt issuer, including those related to ESG,” he said on 25 October in a report explaining Moody’s approach.

“For instance, for corporates we seek to assess how ESG issues influence drivers of credit quality, such as demand for products, reputation or costs of production.”

He noted that Moody’s objective is not to capture all considerations that may be labelled green, sustainable or ethical, but rather those that have a material impact on credit quality.

The rating agency launched its Green Bond Assessment (GBA) product last year and has completed 20 assessments to date.

Moody’s in September became the first rating agency to become an associate member of the Institutional Investors Group on Climate Change (IIGCC).

“We are pleased and excited to see Moody’s become the first rating agency to join our organisation,” said Stephanie Pfeifer, CEO of IIGCC. “This is a really positive step that sends a powerful message to a segment of the financial sector that has valuable research and insight to contribute to our work and activities going forward.

“We look forward to working closely with Moody’s as we continue to develop our work on how to integrate climate risk and opportunities into investment practices.”

ABN AMRO