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ESG integration

We continue to further incorporate ESG considerations into our products and solutions to meet the needs of market participants who seek trusted insights and standards to make better, more sustainable decisions.

ESG integration into credit rating
MIS incorporates material ESG considerations into its credit analysis and is increasing the systematic and transparent nature of that integration. In 2020, MIS published an updated ESG Cross Sector Methodology introducing new ESG Issuer Profile and Credit Impact Scores for rated entities.
Assessing exposure with Issuer Profile Scores (IPS)
IPS are separate environmental, social and governance scores that assess an entity’s exposure to the ESG categories that are the most material to credit. Our scores provide a consistent way to express this assessment.
Carbon transition
Physical climate risks
Water management
Waste and pollution
Natural capital
Financial strategy & risk management
Management credibility & track record
Organizational structure
Compliance & reporting
Board structure, policies & procedures
Measuring impact with ESG Credit Impact Scores (CIS)
CIS reflect the impact of ESG considerations on the credit rating of an issuer or transaction. CIS place ESG considerations in the context of the other credit drivers that are material to the credit rating of the issuer or transaction.

For example, the sovereign in Figure 1 is highly negative (CIS-4), reflecting high exposure to social risks and moderately negative exposure to environment risks combined with relatively low resilience as weakening public finances and relatively low-income levels constrain its capacity to respond to environmental and social shocks.

On the other hand, the sovereign in Figure 2 is positive (CIS-1), reflecting low exposure to environmental risks, limited social risks and very strong governance and forward-looking policymaking.
Figure 1
Figure 2
Visualizing ESG risk with Heat Maps
MIS Environmental and Social Risk Heat Maps provide a qualitative assessment of the overall credit materiality of environmental and social risks for each of the sectors we rate globally. Our heat maps serve as consistent starting points for a more granular evaluation of environmental and social risks at an entity level.
MIS Environmental Risk Heat Map
Assessment approach

Based on a review of 89 global sectors representing approximately $79 trillion of rated debt. In this report, MIS highlighted 13 sectors with $3.4 trillion in rated debt that face “very high” or “high” environmental credit risk.

MIS Social Risk Heat Map
Assessment approach

Based on MIS analysis of 82 global sectors with total rated debt of about $77.7 trillion, social considerations pose “high risk” to the credit quality of 14 sectors with $8.3 trillion in rated debt.

ESG integration into risk management
MA is uniquely positioned to provide global markets with extra-financial risk information. CreditView and DataHub give more than 22,000 users access to crucial ESG data and scoring applications. These tools enable our customers to make better and faster decisions around ESG, including:
  • Using Artificial Intelligence and Machine Learning techniques to benchmark and predict ESG scores using the ESG Scores Predictor
  • Creating dashboards with climate adjusted scenarios, expected default frequencies (EDFs), spreads and more
  • Providing REIS Network users with aggregated climate risk scores that show the climate risk threshold levels for commercial property locations
We are further integrating ESG into additional MA products and within our regulatory and accounting tools.