Fitch Ratings: Enduring Focus on ESG and Sustainability Projects at Leading Credit Ratings Provider

For over a century, Fitch Ratings has been building and creating value for global capital markets around the world.

The firm’s rigorous analysis and expertise have led to the development of market-leading tools — methodologies, indices, research and analytical products — which help investors to manage risk and fund growth.

With growing attention from policymakers and investors on ESG issues, market participants recognise that the long-term sustainability of operations matters more than ever. “Attitudes and actions on climate change, diversity, and human rights affect the risk-return profile of an investment portfolio,” says global head of ESG Research Marina Petroleka, “and an issuer’s brand and reputation.”

Fitch Group has responded in a comprehensive manner to this shift in ESG’s importance, initially through the launch in 2018 of a Sustainable Finance Group within Fitch Ratings. This was closely followed in 2019 with the launch of ESG Relevance Scores, the first integrated cross-asset ESG-scoring system for credit ratings. “ESG factors guide individual credit rating decisions across Fitch’s entire rated universe,” adds Andrew Steel, global head of sustainable finance.

At all stages, Fitch has engaged with issuers and investors to ensure that its products and services match their requirements. The evolution of Fitch’s ESG offering culminated in the launch in September 2021 of Sustainable Fitch.

This new business line is a centralised hub for all of Fitch’s products and services, including ratings which assess ESG performance and the profile of entities and their debt instruments. “It was designed with investors in mind,” says Petroleka. “The ESG ratings are produced by teams of trained analysts who create granular, comprehensive and transparent reports and datasets.

“There has also been expansion of our ESG data feeds, through Fitch Solutions, and an increase in specialised research through a dedicated team.”

Steel is at the helm of this activity. Now head of Sustainable Fitch, he was previously global group head of sustainable finance at Fitch Ratings. Andrew Steel is also responsible for the leadership, development, and co-ordination of all Fitch Group ESG initiatives.

“With the only service in the world that directly leverages more than 100 years of best practice in rating methodologies and analytical excellence,” he says, “we saw the need to use that expertise to develop integrated analysis and data services to help market participants uncover true ESG risk and accelerate ESG integration.”

Steel has 30 years’ experience across ratings, banking, private equity and corporate treasury and embodies the analytical expertise of Fitch Ratings. His deep knowledge of equity and debt markets was in some ways the launchpad for Sustainable Fitch.

“Investors want transparent, cross-comparable ESG ratings that look beyond labelling or targets to assess ESG fundamentals,” he says. “We made sure our approach is informed by the market structure, with outreach across investors, issuers, regulators, NGOs and others.

“This resulted in Sustainable Fitch, providing investors with best-in-class ESG ratings, supported by data and analysis and backed by consistency, comparability, coverage and granularity.”

Marina Petroleka, meanwhile, brings with her the research acumen needed to analyse the ever-expanding issues facing the world of ESG. She leads a growing team of global research analysts undertaking detailed research and credit-relevant analysis on ESG themes and cross-sector trends.

Petroleka also supports and provides input for ESG-related research in all Fitch’s analytical group areas. She previously held senior research roles in Fitch Group, including EMEA regional credit officer for Fitch Ratings and global head of Industry Research for Fitch Solutions.

“The strands which make up ESG conversations are ever-growing and it’s vitally important that the research stays one step ahead,” she says. “Our ESG research team enables just that. It provides global coverage of thematic and cross-ESG issues, in developed and emerging markets in APAC and Latin America. It also enables exploration of transmission mechanisms in credit risks.”