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Pricing ESG risk in credit markets: reinforcing our conviction

To analyse credit risks with greater precision, we developed a pricing model last year to capture the influence of environmental, social and governance (ESG) factors on credit spreads. It showed a convincing relationship between ESG risk and credit spreads, manifesting as an ESG-risk curve.

After expanding this research, we found this relationship between ESG risk and credit spreads to be reinforced.

More Insights

Why fixed-income investors should factor sustainability into investment decisions
What drives an impactful engagement with a credit issuer?
Enel steps up: the world’s first SDG-linked bond
How has an Italian energy company structured the world's first SDG-linked bond?
Pricing ESG risk in sovereign credit
Building on our studies showing a strong relationship between the environmental, social and governance performance...
We can all get along (part II)
How bondholders can engage companies for the benefit of all stakeholders
We can all get along
In this two-part paper, we assert that the shared interests of bond and shareholders in companies provide incentives to jointly engage companies – and generate positive outcomes by doing so. In this first instalment, we dispel the fallacy that the imperatives of bond and shareholders typically diverge, and argue that their common standing as financial stakeholders gives them the legitimacy to engage corporate boards and management teams to encourage sustainable growth and long-term value creation.