57% of Rated Asia-Pacific Companies Face ESG Risks

Environmental News from Asia-Pacific:

A new report has revealed that 57% of rated companies in the Asia Pacific face ESG risks and these risks work out to more than $4tn in aggregated debt.

The S&P Global Ratings report ESG Risks Negatively Influence Over $4tn Of Debt At Rated Companies In Asia-Pacific covers the rating agency’s ESG credit indicators on more than 500 rated companies in China, India, Indonesia, Japan, Korea, Australia, and New Zealand.

Governance factors negatively influence about 22% of the rated entities, but they are largely issuer-specific. Governance factors influence more negatively the ratings of companies in Indonesia, India, and China. The rated firms there are often small, family-owned businesses with below-average internal controls and transparency or include state-owned entities with weak parental oversight.

Government-imposed price controls and community litigation risks often affect the profitability of mining companies. Transport cyclical and infrastructure, non-discretionary retail, and leisure were among the first hit by the pandemic.

The report also predicts that these companies will continue to be exposed to environmental risks in the next two years due to fossil fuels still accounting for the majority of the power generation mix in Asia-Pacific, most notably in China, India, and Southeast Asia.

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Source: Down To Earth

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