A growing number of financial institutional investors are looking to incorporate environmental, social and governance (ESG) factors into their lending processes, alongside the traditional financial factors for risk assessment. Others aspire to implement basic ranking mechanisms for simple internal or external reporting purposes. Some are planning to develop a more sophisticated future model that requires a large, comprehensive data base. However, there are still a significant number of differences to note compared with the classical PD or LGD models, starting with the one-year horizon for the latter predictions versus a more than forty-year horizon for climate events to transpire.
The unprecedented rise in demand for ESG risk assessments and data has prompted several third-party ESG risk rating/ranking providers to mushroom across the financial services sector. However, there is no absolute consensus on the exact meaning of ESG risks, nor is there any complete and comprehensive regulatory guidance that could help make sense of the multitude of non-harmonised approaches currently to be found within the ESG ranking business. We do expect, though, that ESMA (European Securities and Markets Authority) and other authorities will release more comprehensive guidance in the coming months.
We would like to share our views and experiences in this context.
Please join us for our global/European webinar, during which our ESG and risk modelling experts will share key findings from their recent projects and provide an overview of expected future developments, in both a regulatory and an implementation context.
To enable you to participate, we offer the webinar with the identical content at the following dates and for the respective time zones:
- For Europe and North America: May 11th, 1.00pm – 2.30pm CET
- For Eastern Europe and Asia: May 18th, 8.30am – 10.00 am CET
Starting with the simple ranking approaches, we want to give participants an overview of the available data to the extent that it has been explored to date. We will also cover how to incorporate ESG-related factors into the credit lending process and demonstrate how to improve future data availability.
Participation is free of charge.
More information and registration: https://www.pwc-events.com/esg-ratings