ESG factors determine a company’s impact on society and environment. It gives a non-financial glimpse on the prospects of future opportunities and risks to the business
Ratings agency India Ratings and Research on Thursday launched its integrated disclosure that shows how environmental, social, and governance (ESG) factors impact individual credit rating decisions.
These disclosures will be a part of rating action commentaries for all entities having listed securities whose ratings will be assigned or reviewed effective from January 1, 2022.
ESG factors determine a company’s impact on society and environment. It gives a non-financial glimpse on the prospects of future opportunities and risks to the business.
“The ESG disclosures, which will be incorporated by Ind-Ra’s analytical teams, would transparently and consistently communicate both the relevance and materiality of ESG elements to the rating decision,” Ind-Ra said.
“The E, S and G relevance can be both positive and negative and will be sector based and entity specific. The disclosures are drawn from Sustainability Accounting Standards Board’s (SASB) Global Sustainability Framework with a total of 14 factors.”
As per Ind-Ra, these factors are fundamental factors in the ESG journey of any entity and would help it to make the disclosures specific wherever these have a relevance to the rating.
“Ind-Ra relies on the information shared by the rated company including, but not limited to, public sources as part of its rating exercise.
“Our focus is purely on a fundamental credit analysis and so our ESG Relevance Disclosures are solely aimed at addressing ESG in that context.”