Fitch signs to PRI and establishes sustainable unit

Ratings agency Fitch has launched a new Global Sustainable Finance unit and Morningstar is preparing to revamp its sustainability fund ratings system.

Ratings agency Fitch has signed up to the United Nations-supported Principles for Responsible Investment and established a specialist sustainable finance unit.

On Thursday, Fitch Group’s president and chief executive officer, Paul Taylor detailed several initiatives in a media statement.

He explained: “We recognise the increasing importance being placed on ESG by the investor community and other market participants, and are committed to playing our role in helping to better align investors with the long-term objectives of broader society.”

Fitch’s affiliation comes a few days after delegates met at the PRI in Person conference in San Francisco, where the role of ratings agencies in determining ESG credentials of companies and funds was discussed.

Fitch has dovetailed its PRI membership with the establishment of a new Global Sustainable Finance Group, responsible for reviewing how ESG factors are incorporated into credit ratings. The formation of the group is designed to increase levels of transparency around ESG analysis.

Andrew Steel, global head of Sustainable Finance at Fitch Group, said: “Global taxonomy surrounding ESG is starting to emerge and we view the UN PRI initiative as a key forum for refining and developing the dialogue between investors and service providers.

“Investor demand for sustainable investment opportunities and a better understanding of how ESG factors can impact fundamental fixed income credit analysis has increased significantly in recent years.”

Separately,  Morningstar is planning the relaunch of its globe fund ratings system, following mixed reviews from experts of the group’s previous scoring methodology. ESG Clarity has been told that further details of this will be launched in October.