Europe’s financial health and sovereignty depends on having home-grown capacity to assess credit and ESG risk. American rating agencies currently dominate the market but, as Guillaume Jolivet, Chief Operating Officer, Scope Group, argues, European corporates and governments should no longer be shoehorned into the one-size-fits-all US model.
The emergence of Europe’s unified capital market for corporate and government financing has triggered fresh urgency to having a greater diversity of opinion on credit risk, ESG risk and ESG impacts.
Credit ratings are a fundamental building block of the efficient capital markets necessary for funding the real economy. ESG ratings are increasingly influencing the behaviour of public and private institutions and ultimately impact society at large.
Conventional rating approaches developed outside Europe can lead to structural disadvantages for European issuers. Therefore, it is essential for European policymakers – determined as they are to enhance the role, resilience, and independence of Europe’s capital markets – to ensure that there is an equally robust and reliable European source of financial and non-financial ratings.