Nordic Credit Rating (NCR) is committed to increasing the transparency of how environmental, social and governance (ESG) factors are included in our assessment of creditworthiness. These factors are considered and highlighted in our credit ratings if we believe they are material and relevant to the creditworthiness of an issuer. ESG factors can influence ratings, outlooks and headroom within ratings. The potential influence of ESG factors on our credit ratings depends on the financial impact they have on an entity's creditworthiness, whether positive or negative.
An issuer's exposure to ESG factors is taken into account throughout our rating methodology for financial institutions, where relevant. The factors included in an assessment are those tangible issues with the potential to directly affect the issuer's operating environment, risk appetite, competitive position, and performance indicators.
From the second half of 2022, NCR will include a separate ESG section in all rating reports for financial institutions. This section will include a table detailing what we consider to be the most material ESG factors that have an impact on the creditworthiness of an issuer. These factors were already considered in our ratings, but the introduction of this section aims to clarify the impact of ESG factors on our overall assessment.