S&P Global Ratings has launched a green evaluation service to measure sustainability at the asset level.
Green Evaluations, which are separate from traditional credit ratings, can be used to assess the green impact of a variety of securities and are independent of credit characteristics.
"We wanted to respond to the robust market demand for rankings that consistently measure climate risk and environmental impact, and research that delivers actionable insights," says Michael Wilkins (pictured), managing director and head of environmental and climate risk research at S&P Global Ratings. "We developed this approach after consultation with investors, issuers, and other constituents, and we're confident that it sets a new standard in the green finance market."
Green Evaluations are currently available for projects or initiatives focused on renewable energy, energy efficiency, green transportation, environmentally compliant buildings, fossil fuel projects, nuclear, and water. The evaluations can be applied to all or part of an eligible financial instrument.
The Green Evaluations are aligned with the International Capital Market Association's widely accepted Green Bond Principles, as well as provide a benchmark on environmental impact or climate resilience.
In determining a Green Evaluation, S&P Global Ratings first evaluates the governance and transparency of financings from an environmental perspective. Depending on the project, analysts will then either estimate an asset's expected lifetime environmental impact in its region or its likely level of resilience to natural catastrophes. Evaluations will be delivered as a digital or printable report that will be available through the S&P Global Market Intelligence platform, as well as the upcoming Ratings360 platform.
S&P Global Ratings has long incorporated climate and environmental risks into its credit rating process. In May 2016, the organisation expressed support for the UN Principles for Responsible Investment initiative to bring greater clarity on how environmental, social, and governance factors are considered in credit analysis. It also participates in the Financial Stability Board's Task Force on Climate-related Financial Disclosures, an industry-led body that is developing voluntary climate-related financial disclosure standards.
