ECB paper studies ESG ratings’ effects on debt costs

Downgrades had only temporary effect on US firms’ bond spreads, researchers find

European Central Bank
The European Central Bank

Changes to evironmental, social and governance (ESG) ratings temporarily affect the cost of US firms’ debt, research published by the European Central Bank finds.

In Do debt investors care about ESG ratings? Kornelia Fabisik, Michael Ryf, Larissa Schäfer, and Sascha Steffen examined US companies rated by data firm Refinitiv. In April 2020, Refinitiv changed its methodology, cutting the ESG ratings of 87% of the companies it monitored.

The authors looked at the access to credit of firms which

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