Activating an environmentally sustainable future

Q&A with Yasmina Serghini

Q&A with Yasmina Serghini

ASSOCIATE MANAGING DIRECTOR, MOODY’S INVESTORS SERVICE

Leading Moody’s Investors Service ESG Working Group for EMEA and overseeing teams of analysts have given Yasmina Serghini more than a front-row seat to the rise of ESG awareness in the market. In fact, by supporting research, issuer engagement and market outreach, she has helped it along.

Q: Why is it important for Moody’s to take a leading role in the ESG space?

A: It’s a foundational change in the market. There is an expectation among market participants and other stakeholders, including regulators, that Moody’s will highlight the risks and opportunities associated with ESG factors. And, with increasing sustainable finance regulation in Europe, a number of institutions and investors are turning to Moody’s to seek more information and more clarity as they build their own ESG capabilities.

We’repast the wake-up call. A dialogue has opened, and Moody’s is expected to contribute.

Q: What is Moody’s doing to advance the conversation and help others incorporate ESG considerations?

A: First, it’s a matter of creating a common language. Last year, our ESG and industry experts worked together to develop a powerful taxonomy that reconciles the relevant issues with the ratings. After a public comment period, we published a cross-sector methodology in January 2019 to help the market understand how Moody’s incorporates ESG factors, including assessments of materiality and time horizons.

Beyond that, we published separate, robust, sector-level analytical frameworks specific to environmental, social and governance factors to offer insight into what we consider, which should help market participants better understand and assess their risk exposure. Now we’re focused on creating actionable tools for the investor community that provide issuer-level analysis.

We complement this with a steady stream of research reports hosted on Moody’s ESG hub. These range from broad insights like various economies’ susceptibility to climate change to event-specific analysis, such as the credit implications of Cyclone Idai for Mozambique investors.

Q: How else is Moody’s helping support a more sustainable and environmentally responsible financial system?

A: As the green bond market has diversified — and the whole financial system seeks to become “greener” — Moody’s has expanded the range of issuers we evaluate under that criteria. As we transition to a lower-carbon economy and sovereigns work to implement their various Paris Agreement commitments, there is tremendous need for funding to finance green projects and green infrastructure.

Investors want to know that the money they invest in a green bond will eventually serve a project that makes a positive impact on the environment, and many want to track the outcomes for their own reporting. Last year, we issued a report linking the $23 billion of green bond debt that Moody’s has assessed to a savings of 2.6 million metric tons of annual carbon emissions.

Q: How is Moody’s directly engaging with investors to share these insights?

A: Moody’s participates in a range of public and private forums, and our employees regularly speak at events, including those hosted by the World Bank Group. Partnering with the UN-backed Principles for Responsible Investment has given us the opportunity to connect with investors around the world and learn about the analytical challenges they encounter. And we continue to be a member of the Institutional Investors Group on Climate Change and to participate in the Institute of International Finance’s sustainable finance and infrastructure working groups.