(Bloomberg) -- Message to bond underwriters: Some big customers are sizing up your ESG credentials.Most Read from BloombergBHP’s $39 Billion Copper Play Was ...
While vocal opposition to environmental, social and governance principles in the US has dominated headlines of late, behind the scenes, some of the world’s biggest bond issuers are quietly telling global banks that bad ESG scores may dent their appeal as underwriters.
A spokesperson for KfW, short for Kreditanstalt für Wiederaufbau, said the company has regular exchanges with its dealer banks about issues including “potential measures to improve ESG ratings.” When KfW selects banks for its green bonds, ESG ratings are among several criteria that the issuer takes into account, the spokesperson said, adding that KfW didn’t talk to Barclays about ceasing its cooperation with the bank.
Like most publicly traded firms of its size, Barclays is rated by several ESG data providers, including MSCI Inc., Morningstar Inc.’s Sustainalytics and S&P Global. A spokesperson for ISS said it doesn’t comment on individual company scores or profiles, while noting that most ISS ESG ratings are freely available on its website.
“In the end, it’s about reputational risk for us,” said Bodo Winkler, Berlin Hyp’s head of funding and investor relations. “If a dealer’s fossil-finance numbers are going up year-on-year, then our values aren’t aligned and it’s important we don’t sit together.”
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