Sustainable Fitch rating, score methodologies

Sustainable Fitch rating, score methodologies

Sustainable Fitch, a leading provider of ESG (Environmental, Social, and Governance) ratings and research, offers a comprehensive framework for evaluating the sustainability performance of entities. Their methodologies are designed to provide investors and financial professionals with a clear understanding of a company's ESG impact. This article explores the key aspects of Sustainable Fitch's rating and score methodologies.

Rating Methodologies

Sustainable Fitch's ESG ratings and scores are based on a detailed assessment of an entity's performance across various ESG dimensions. The methodologies are designed to be transparent, objective, and aligned with international standards such as the ICMA Green Bond Principles and the ICMA Social Bond Principles.

# ESG Entity Rating

The ESG Entity Rating is a qualitative assessment of an entity's overall ESG performance. It ranges from '1' (weak) to '7' (excellent) and is based on a comprehensive review of the entity's policies, practices, and performance in areas such as environmental impact, social responsibility, and governance.

For example, Sustainable Fitch assigned Wessex Water Services Limited an ESG Entity Rating of '2' [1], reflecting the company's broadly positive impact in providing water and wastewater services.

# ESG Framework Rating

The ESG Framework Rating evaluates the quality and effectiveness of an entity's ESG framework, including its policies, targets, and reporting mechanisms. This rating ranges from '1' (weak) to '7' (excellent) and is designed to assess the robustness of an entity's ESG strategy.

Sustainable Fitch affirmed Severn Trent PLC's ESG Framework Rating at '2' [2], highlighting the company's strong ESG framework and reporting mechanisms.

Score Methodologies

Sustainable Fitch also assigns entity scores, which provide a quantitative measure of an entity's ESG performance. These scores range from 0 to 100 and are calculated based on a detailed analysis of the entity's ESG data and performance metrics.

For instance, Sustainable Fitch assigned a score of 73 to Wessex Water [1], indicating the company's strong overall ESG performance.

Second-Party Opinion

In addition to its own ratings and scores, Sustainable Fitch provides Second-Party Opinions on green and social bond frameworks. These opinions assess the alignment of the framework with international standards such as the ICMA Green Bond Principles and the ICMA Social Bond Principles.

Sustainable Fitch provided an 'Excellent' alignment opinion for the green bond framework of Société des grands projets [3], indicating that the framework aligns well with international standards.

Conclusion

Sustainable Fitch's rating and score methodologies provide investors and financial professionals with a reliable and transparent assessment of an entity's ESG performance. By using these methodologies, investors can make more informed decisions and contribute to the growth of sustainable finance.

References

[1] https://www.sustainablefitch.com/insights/
[2] https://www.sustainablefitch.com/insights/
[3] https://www.sustainablefitch.com/insights/