In this month’s installment of The Bottom Line series, Certified Ergonomist and Research Consultant Blake McGowan shares the findings of a report on the impact of environmental, social, and governance (ESG) factors on corporate finances.
Data shows that ESG and safety management is material to business performance. The findings are:
- 4% of all credit rating changes are influenced by social factors.
- Of those 4%, social factors were the key drivers of the changes in up to 12% of cases.
- Three-quarters of those changes were downgrades.
- The two most important social factors with regard to corporate credit rating changes are human capital & safety management.
- Good safety management can upgrade corporate credit rating.
References: De La Gorce N, Williams J, Wilkens M, Martin ND, and Burks B. (2018). How Social Risk And Opportunities Factors Into Global Corporate Ratings. S&P Global Market Intelligence.