DBRS Morningstar Publishes Final Methodology for Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings

DBRS Morningstar finalized its “DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings.”

This methodology presents the criteria for which all DBRS Morningstar ratings are assigned and/or monitored.

The methodology supersedes the prior version published on May 17, 2022, and is effective as of July 4, 2023.

No comments were received from the Request for Comment period ended June 19, 2023.

The methodology details how DBRS Morningstar evaluates and incorporates 17 environmental, social, and governance (ESG) credit risk factors in the assessment of its credit ratings across Governments, Financial Institutions, Corporate Finance, and Structured Finance. The updated methodology introduces a new section entitled “Climate Change Considerations,” which provides more detail on DBRS Morningstar’s approach to climate change risk. This does not introduce any new ESG factors but discusses physical and transitional climate risks in the context of two existing climate-related factors: Climate and Weather Risks and Carbon and Greenhouse Gas Costs. In addition, the lists of methodologies in Appendix B were updated to reflect new methodologies and to delete discontinued ones.

DBRS Morningstar deems the update not to be material and has determined that no ratings are expected to change as a result of this update.

All comments received during the request for comment period have been published to the DBRS Morningstar website, except in cases where confidentiality is requested by the respondent.

Notes:
DBRS Morningstar methodologies are publicly available on its website www.dbrsmorningstar.com under Methodologies & Criteria.

For more information on this methodology or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected]