When Warren Buffet famously told employees at Salomon Brothers that if they lost money, he would be forgiving, but if they “lost a shred of reputation for the firm, (he) would be ruthless,” he was not only setting expectations internally – he was setting them externally as well, revealing to all the company’s stakeholders what type of governance and management practices and systems they could expect the firm to employ.Moody’s
In 2018, we predicted in The Bond Buyer that a superior reputation for ESG would favorably impact bond ratings. In 2019, according to Moody’s, it influenced 32% of their ratings. In 2020, it influenced 85%.
August 21, 2021
“Environmental, social and governance (ESG) risks were cited as a material credit consideration in 85% of Moody’s Investors Service’s 8,700-plus rating actions for private-sector debt issuers in 2020, up from 32% in 2019.”
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Risks to a reputation for ESG integrity is material in the credit markets.
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