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2021 | Book

Introduction Read chapter Read first chapter

Sustainability Rating Agencies vs Credit Rating Agencies

The Battle to Serve the Mainstream Investor

Author: Dr. Daniel Cash

Publisher: Springer International Publishing

Book Series : Palgrave Studies in Impact Finance

Part of: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft" , Springer Professional "Technik"

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About this book

This book details the difference between the two rating industries, but this difference is converging all the time. The concept of investing in a more responsible and sustainable manner is drawing in some of the world’s leading investors and, with it, regulations and policies are developing at the highest levels. However, the market is not getting what it needs to fully submit to the concept of responsible investing. It has called for more to be done from those tasked with injecting information into their processes, and two industries in particular have been identified as being natural partners. It has been suggested that they are on a collision course to serve the mainstream investor, and in this book, that collision course is contextualised, explained, presented, and finally its outcome predicted.

Table of Contents

Frontmatter
Chapter 1. Introduction
Abstract
The introduction to the book provides the context for the ‘battle’ that is portrayed throughout the book between the sustainability rating agencies and the credit rating agencies. In presenting the context, the introduction signposts the reader through the different junctures of the book, ranging from analyses of the two key players to the underlying dynamics that will affect the outcome of the battle between the two industries to serve the mainstream investor base.
Daniel Cash
Chapter 2. The ‘Mainstreaming’ of Responsible Investment
Abstract
This opening chapter charts the development of the concept of ‘responsible investment’. It also introduces the reader to the major players in the arena, and what their positions entail. After interrogating the concept of responsible investment, the trajectory of the concept is analysed in detail, moving from the formal development of the concept in the 1970s and 1980s, through to the modern version of ‘ESG Integration’. The chapter introduces these concepts to the reader in order to build the foundation of the ‘mainstreamisation’ of responsible investment as a concept, upon which the rest of the book is built.
Daniel Cash
Chapter 3. The Sustainability Rating Industry
Abstract
The first of the book’s two protagonists are introduced and explained in this chapter, with the sustainability rating agencies and their methodologies explored for the reader. Furthermore, some complications in the definitions of the industry itself are resolved. Then, the issues that the field has identified are discussed in order to arrive at a place where one can more accurately predict the industry’s trajectory.
Daniel Cash
Chapter 4. The Credit Rating Agencies
Abstract
This chapter introduces the reader to the credit rating agencies and their development as an industry. A picture is painted of the agencies’ history, through to the modern day whereby the ‘Big Three’ rating agencies stand powerfully. The chapter also directs its focus to the movement of the credit rating agencies into the ESG field, by way of working closer with investors and sustainability-concerned initiatives, becoming more transparent with their methodological processes, and by purchasing sustainability rating agencies to accentuate their offering to the mainstream investor base.
Daniel Cash
Chapter 5. ‘An Undercurrent of Need’: Understanding the Dynamics of the Responsible Rating Relationship
Abstract
This important chapter details for the reader the underlying dynamics that influence the direction of this sector. In focusing on the role of investors, which the chapter identifies as being the driving force for movement in the sector, the chapter explains how the changing nature of the investment universe and subsequently what the market requires, is actively affecting the sustainable and credit rating industries. The dynamics identified provide a clear picture of what the mainstream need, and also that there is currently no option other than to serve those needs. This then sets up the final chapter.
Daniel Cash
Chapter 6. Who Will Triumph?
Abstract
Now that the book has introduced both rating industries and also explained what the underlying factors are affecting the progression of the mainstreamisation of the sustainable investment movement, those analyses are utilised to suggest which industry will be better suited to serve that mainstream investor base. The chapter identifies a number of global and also regulatory themes which are developing, particularly with regard to the subject of disclosure, that provide further insight into how the market will develop. A number of scenarios are played out in the chapter before the book predicts the future for the ‘battle’ it has identified.
Daniel Cash
Chapter 7. Conclusion
Abstract
The conclusion brings together the dominant strands within the book and demonstrates the interconnectedness between them. The trajectories of two of the leading political components within the Western development of the concept of sustainable finance are pursuing particular and different objectives, but neither have a strong chance of success. The American trajectory has dismissed the usage of ESG within the financial services (although that may change under the Biden Administration, whilst this also highlights the fragmented development of the American experience), and Europe has pursued a progressive agenda that is more ideologically sound than it is practical, with obvious consequences regarding a lack of authority to truly impose the model of sustainable financial practice now coming to bear. The two developments are actively impacting the battle to serve the mainstream investor. Yet, some private developments are reviewed and concluded here and adjoined to the chances of success for the two industries the book focuses on.
Daniel Cash
Backmatter
Metadata
Title
Sustainability Rating Agencies vs Credit Rating Agencies
Author
Dr. Daniel Cash
Copyright Year
2021
Electronic ISBN
978-3-030-71693-6
Print ISBN
978-3-030-71692-9
DOI
https://doi.org/10.1007/978-3-030-71693-6