In addition to the traditional (corporate and/or securities-based) ratings commonly obtained by an issuer in connection with an international debt offering, corporates may now avail themselves of a new metric - the ESG rating. To date, there is no consensus on how ESG ratings, which assess a company's ESG performance, are derived or what they reflect.
As more corporate bonds are issued linked to ESG ratings, these ratings will become more material, and a consensus around how ESG ratings should be disclosed and regulated will directly impact their reliability. In this article, Baker McKenzie lawyers - Rob Mathews, Ben Bierwirth and Elaine Baynham - consider some of the challenges posed by ESG ratings in the context of debt securities offerings.
*This article was first published in the International Financial Law Review.