While the investment performance of public companies is well researched, analysis of the credit risk of private companies has been thin. Using this data, Bain analysed the differences between the top ESG performers and the bottom ones. Our analysis found that clients with low ESG performance were about twice as likely to be in arrears as the high ESG performers, all else being equal. These results indicate a correlation between higher ESG performance and lower credit risk across different geographies and industries. ESG-focused clients tend to have more efficient, long-term-oriented operations and thus pose a lower credit risk for the bank.

Source: The Edge Markets November 20, 2021 15:32 UTC