Sustainable Fitch Launches Leveraged Finance ESG Scores

Published 

Sustainable Fitch has announced the launch of its ESG Scores for Leveraged Finance. The ESG scores provide the CLO investment community with an absolute scoring system which allows granular assessment of environmental, social and governance factors for leveraged finance entities and labelled issuance.

Sustainable Fitch’s ESG Entity Scores (ESG.ES) are an independent view on a leveraged finance issuer’s overall impact on environment and society and the effectiveness of its governance. The ESG Framework Scores (ESG.FS) are a view on the use of proceeds or soundness, as well as the monitoring and tracking, of defined key performance indicators.

The ESG.ES and ESG.FS are provided on an absolute scale from 0 to 100, allowing comparability across and within industries and regions. To date, Sustainable Fitch has ESG leveraged finance scores on more than 430 individual borrowers in the European market, providing an ESG view on more than 75% of the portfolio in an average Fitch-rated European CLO. Coverage will continue to expand with entities and transactions being monitored and maintained to provide a comprehensive ESG service to the CLO markets.

Sustainable Fitch is also extending provision of its ESG Scores to the North American CLO market, and is on target for 80% of US CLO portfolio coverage by end-2Q23.

Richard Jefferies, Global Head of ESG Scores for Leveraged Finance at Sustainable Fitch says: “By working with CLO managers we have created a solution to provide consistency and coverage to the market. Our ESG Scores for Leveraged Finance provide an independent asset-by-asset view of a business’s impact on both environmental and social factors, as well as a view on the strength of governance. Sustainable Fitch’s absolute scoring approach allows comparison between issuing entities across sectors, regions, and business activities.”

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