Credit rating agency drops ESG scores due to backlash against corporate wokeism.
Rating Agency S&P Global Drops ESG Scores, Embraces New Approach
Amidst growing skepticism surrounding the effectiveness of environmental, social, and governance (ESG) metrics, rating agency S&P Global has made a bold move. The agency has decided to abandon the use of ESG scores when assessing corporate borrowers. This decision comes at a time when there is a broader backlash against what some perceive as “woke” agendas infiltrating boardrooms across the United States.
A Shift in Approach
Starting from 2021, S&P Global has revamped its rating system for companies. Instead of relying on ESG scores, the agency now rates companies on a scale from 1 (best) to 5 (worst) in various key areas.
Questioning the Usefulness
The decision to drop ESG scores reflects a growing skepticism within the industry. Many have raised concerns about the reliability and relevance of these metrics in accurately assessing a company’s performance and risk. S&P Global’s move signals a shift towards a more comprehensive and nuanced evaluation process.
Embracing Change
By embracing this new approach, S&P Global is demonstrating its commitment to adapt and evolve in response to changing market dynamics. The agency recognizes the need for a more holistic assessment that goes beyond the limitations of ESG scores.
Looking Ahead
As the debate around ESG metrics continues, S&P Global’s decision to move away from them sparks a broader conversation about the future of corporate evaluation. It remains to be seen how other rating agencies and market participants will respond to this shift, but one thing is clear – the landscape of assessing corporate borrowers is evolving.
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