Environmental, Social and Governance: January 26, 2022

How ESG* Factors Impact
Gregg Lemos-Stein, CFA

Chief Analytical Officer
Corporate Ratings
Credit Risk Meredith Beddow

Director, Credit & Risk Solutions
S&P Global Market Intelligence
Michelle Cheong
Director, Senior Lead of Product Development, RatingsXpress®
*Environmental, Social and Governance
January 26, 2022
Permission to reprint or distribute any content from this presentation requires the prior written approval of S&P Global. Copyright © 2022 S&P Global Inc. All rights reserved.
Today’s Speakers
Gregg Lemos-Stein, CFA Meredith Beddow Michelle Cheong

Chief Analytical Officer Director Director
Corporate Ratings Credit Risk Solutions Senior Lead of Product
S&P Global Ratings S&P Global Market Intelligence Development, RatingsXpress®
Permission to reprint or distribute any content from this presentation requires the prior written approval of S&P Global.
Agenda
• Introduction
• ESG at S&P Global Ratings
• A deeper look into ESG Credit Indicators from S&P Global Ratings
• Accessing ESG Credit Indicators on a comprehensive credit ratings & research platform
• Accessing ESG Credit Indicators via flexible delivery channels
ESG at S&P Global Ratings
Gregg Lemos-Stein, CFA

Chief Analytical Officer
Corporate Ratings
ESG in Credit Ratings: Recent Publications
October 10, 2021 October 13, 2021 Mid-Nov 2021 to Jan 2022
General Criteria: Environmental, ESG Credit Indicator ESG Report Cards
Social, And Governance Principles In Definitions and Application With ESG Credit Indicators
Credit Ratings published for all Corporates,
Infrastructure, Banks, Insurers
ESG Factors Influence Our Credit Ratings
Criteria: ESG Credit Factors and Five Key Principles
The intersection of ESG Analytics Five Principles in ESG Criteria
& Credit Risk Analytics
ESG – Environmental, Social and Governance. Source: S&P Global Ratings.

Copyright © 2021 by Standard & Poor’s Financial Services LLC. All rights reserved.
Criteria: ESG In Our Sector-Specific Methodology
Corporate Criteria Framework
*Categories most likely to include consideration of environmental, social and governance credit factors.
CICRA– Corporate industry and country risk score.
Copyright © 2021 by Standard & Poor’s Financial Services LLC. All rights reserved.
ESG Credit Indicators Within Our ESG Process
ESG Credit
Indicators
ESG paragraphs in
issuer reports
ESG Credit Factors Consideration ESG Criteria Application of Credit Rating Communication
criteria and Disclosure
e.g., climate When material to ESG principles in of ESG
Reflecting both ESG
transition risks, creditworthiness Credit Ratings and Influence in ESG sector
and non-ESG credit
health and safety, sector-specific Credit Ratings
factors report cards
governance structure criteria
ESG disclosures in
rating actions
ESG Credit Indicators Reflect
Our Opinion Of How Material ESG Factors Were in our Credit Analysis
Influence on
Environmental Social Governance Definition
credit analysis
Factors are, on a net basis*, a positive consideration
Positive E-1 S-1 G-1 in our credit rating analysis, affecting at least one
analytical component.
Factors are, on a net basis*, a neutral consideration
Neutral E-2 S-2 G-2
in our credit rating analysis.
Factors are, on a net basis*, a moderately negative
Moderatively
E-3 S-3 G-3 consideration in our credit rating analysis, affecting
negative
at least one analytical component.
Factors are, on a net basis*, a negative consideration
Negative E-4 S-4 G-4 in our credit rating analysis, affecting more than one
analytical component or one severely.
Factors are, on a net basis*, a very negative
Very negative E-5 S-5 G-5 consideration in our credit rating analysis, affecting
several analytical components or one very severely.
ESG Credit Indicators | Key Concepts
They add transparency regarding S&P Global Ratings’ view on ESG credit factors
ESG Credit Indicators
For all public ratings ESG

Examples Of Credit influence
factor
Assessing the influence of ESG factors in our
credit rating analysis Moderately Very
Positive Neutral Negative
negative negative
Using a scale from 1 to 5

E-1 E-2 E-3 E-4 E-5 Climate risk
Providing additional disclosure, as they are

applied/updated after the rating has been S-1 S-2 S-3 S-4 S-5 --
determined.
G-1 G-2 G-3 G-4 G-5 Transparency
They are NOT a sustainability rating nor an S&P
Global Ratings ESG evaluation.
ESG Credit Indicators And Ratings Are Not Necessarily Correlated
They give more insights on the materiality of ESG credit factors, non-ESG credit factors remain relevant
Renewable Power Generation Coal Company

ICR
B+/Stable B+/Stable
(Outlook)
E E-1 E-5
S S-2 S-3
G G-1 G-2
 High and stable profitability from long-term committed government

 Pure-play thermal coal producer selling primarily to
incentives for renewable energy generation
Factors
domestic utilities.
ESG
 High cash flow stability from high quality power purchase agreements
 Utility customers on a steady path to reaching net zero GHG
with creditworthy offtakers
emissions over the next decades, displacing coal generation.
 ESG credentials easing access to capital and bank markets, supporting
 Reducing access to capital markets on ESG considerations.
liquidity and refinancing capacity.
 Significant leverage (Debt/EBITDA about 8x)  Limited leverage (Debt/EBITDA about 2x)
Factors
Credit
 Significantly negative discretionary cash flows given ambitious capacity  Significantly positive discretionary cash flows applied to
addition plans debt repayment
 Short-dated debt maturity profile with residual refinancing risk over the  Ample liquidity and cash balances
next five years  EBITDA margins in secular decline
Source: S&P Global Ratings. Power generators include regulated and unregulated entities.
ESG Credit Indicators are NOT
Sustainability Ratings nor an ESG Evaluation
ESG Credit Indicators
Additional disclosure and transparency of our Opinion ESG credit indicators are
of the influence ESG factors
on the entity’s credit rating analysis
separate and distinct
from S&P Global Ratings
ESG evaluations.
The
environment Entity
society and An S&P Global Ratings
ESG evaluation is not a
economy
ESG Evaluation credit rating or
component of our credit
Assessment of an entity’s relative exposure to observable ESG-related risks rating methodology.
and opportunities, including the entity’s impact on the environment and
society across the value chain for a wide range of stakeholders;
Qualitative opinion of the entity’s long-term sustainability and readiness

for emerging trends and potential disruptions,
Initial Publication through ESG Credit Indicator Sector Report Cards
ESG Credit Indicators Help Cross Sector ESG Exposure Comparison
The distributions reflects differentiated risk exposure to E risks (climate, transition, pollution, physical risks,
etc.) or to S risks across sectors, while G risks tend to be more company specific
Distribution of Environmental scores – Selected sectors – % of rated universe
Oil and Gas Metals and Mining Autos Power Generators Building Materials Overall Corporates
100
E-1
80
E-2
60 E-3
40 E-4
E-5
20
Distribution of Social scores – Selected sectors – % of rated universe
Oil and Gas Metals and Mining Autos Power Generators Building Materials Overall Corporates
100
80 S-1
S-2
60
S-3
40 S-4
S-5
20
Source: S&P Global Ratings. ESG Credit Indicator Report Cardfor Oil and Gas, Metals and Mining, Autos, Power Generators, Building Materials and the overall rated corproate sector.
ESG Credit Indicators For Power Generators – A Look At “E” Risk
The distribution reflects the industry’s above-average risk exposure to climate, pollution and physical asset risk
Distribution of Environmental scores – Power generators vs. Overall corporates Environmental credit factors that matter most for our E analysis on Power generators
% of rated universe % of rated universe
80
77
Climate transition risks
70 25
70
60 23
Waste & pollution
14
50 45
16
Climate physical risks
40 4
30 28
4
22 Natural capital
21 2
20
10 6 2
4 Other environmental factors
1 3 1
0
-
E-1 E-2 E-3 E-4 E-5 0 10 20 30 40 50 60 70 80 90
Power Generators Overall Corporates
Power Generators All corporate
Source: S&P Global Ratings. Power generators include regulated and unregulated entities.
ESG Credit Indicators For Metals and Mining – A Look At “S” Risk
The distribution reflects the industry’s above-average risk exposure to health and safety, social and human
capital risks
Distribution of Social scores – Metals and Mining vs. Overall corporates Social credit factors that matter most for our S analysis on Metals and Mining
% of rated universe % of rated universe
100
39
90 Social capital
83 10
80 39
Health and safety
15
70
60 12
Human capital
3
50 46
42 2
Other social factors
40 1
30 - 10 20 30 40 50
20
11 11
10 4
- 1 1 1
Metals and Mining Overall Corporates
-
S-1 S-2 S-3 S-4 S-5
Metals and Mining Overall Corporates
Source: S&P Global Ratings. ESG Credit Indicator Report Card: Metals and Mining.
Accessing ESG Credit
Indicators on RatingsDirect®
Meredith Beddow,
Director, Credit & Risk Solutions
Permission to reprint or distribute any content from this presentation requires the prior written approval of S&P Global Market
Intelligence. Copyright © 2022 by S&P Global Market Intelligence. All rights reserved.
Understand how ESG Factors Affect S&P Global Ratings’ Credit
Ratings on RatingsDirect®
Research Alerts
Alert - > New
Select S&P Global Ratings Credit Research
Choose Article Type = Commentary. Select Commentary/Subject code – “Environmental Social Governance”
Access
Recommend you select “Real Time”
Research on
RatingsDirect Save alert.
Credit Research Search “report card ” or Browse ‘ESG & Green’ research tabs on CIQ
Quick link to tab
for set-up assistance or questions:

ratings.direct@spglobal.com
Leveraging ESG Credit
Michelle P. Cheong
Director, Senior Lead in Product Development,
RatingsXpress
Indicators Data via

Collaborators:
Flexible Delivery Channels

Shruthi Nagarajan
Product Manager, RatingsXpress
Sowmya Karre
Vinay Dayal Dadu

Permission to reprint or distribute any content from this presentation requires the prior written approval of S&P Global Market Intelligence.
Copyright © 2022 by S&P Global Market Intelligence. All rights reserved.
Potential Ways to Leverage ESG Credit Indicators Data
(via Xpressfeed™, XpressAPI and Snowflake)
1. Top level surveillance of ESG Exposures at aggregate industry-country (or regional) level, via
bulk downloads, on demand or in real time
(via Xpressfeed, XpressAPI and Snowflake)
2. Positive (E-1, S-1, G-1) or Negative filters (E-3 to E-5, S-3 to S-5, G-3 to G-5) on ESG Credit
Indicators, drill down into underlying drivers (factors)
(via Xpressfeed, XpressAPI and Snowflake)
2. Positive (E-1, S-1, G-1) or Negative filters (E-3 to E-5, S-3 to S-5, G-3 to G-5) on ESG Credit
Indicators, drill down into underlying drivers (factors)
3. Identify entities whose credit ratings are more likely to be influenced by a particular risk factor
(e.g. “Climate Transition Risks”)
NOTE: The following product demonstrations and slides use a very small sample of the actual data included in the product, and is
purely for illustrative purposes only.
Flexible delivery of E, S, G data
Sample download from ESG Credit Indicators via XpressAPI
Source: RatingsXpress: S&P Global Ratings ESG Credit Indicators Package, S&P Global Market Intelligence. As of January 2022. For illustrative purposes only.
Sample download from ESG Credit Indicators via XpressAPI
Sample download from ESG Credit Indicators via Xpressfeed
Example Use Case 1:
High Level Surveillance on ESG Credit Indicators
Example: Environmental Credit Factors Screening and Drill down
1. Download data via enterprise

2. In addition to industry
platforms; group by E, S, G
scorecards, automate text
indicators according to desired
analysis of published research of
country / region / industry
identified entities
universe
Source:
= RatingsXpress: ESG Credit Indicators
= RatingsXpress: Research
Permission to reprint or distribute any content from this presentation requires the prior written approval of S&P
Global.
Example Use Case 2:
Positive/Negative filters on ESG Credit Indicators
1. Download data via enterprise 2. Download

platforms; using SQL queries or corresponding
API input parameters to extract Environmental factors of
E-3, E-4, or E-5 indicators entities
Source:
Global.
Example Use Case 2:
1. Download data via enterprise 2. Download 3. Assess company’s

platforms; using SQL queries or corresponding credit risks compared to
API input parameters to extract Environmental factors of peers with same SACP or
E-3, E-4, or E-5 indicators entities ICR
Source:
= RatingsXpress: Scores & Factors; and RatingsXpress on Xpressfeed, XpressAPI, and Snowflake
SACP = Standalone Credit Profile. ICR = Issue Credit Ratings
Global.
Example Use Case 2:

Source:
= RatingsXpress: ESG Credit Indicators 4. Drill down into key
credit factors; assess
= RatingsXpress: Scores & Factors; and RatingsXpress on Xpressfeed, XpressAPI, and Snowflake
“buffer” to risk scenarios
= S&P CreditStats
Global.
Example Use Case 2:

Source:
= RatingsXpress: Scores & Factors; and RatingsXpress on 5. Download relevant

4. Drill down into key
Xpressfeed, XpressAPI, and Snowflake research report sections
credit factors; assess
= S&P CreditStats for context behind the
“buffer” to risk scenarios
data
= RatingsXpress: Research
Global.
Example Use Case 2:
Step 1 & 2: Negative filters (E-3 to E-5) filters on ESG Credit Indicators, drill down into
underlying drivers (factors)
scores_id dataitem_id dataitem_valueentity_id Country Industry
53157961 1000002 E-4 528669Nigeria Banks
53158261 1000002 E-3 114331United Kingdom Banks
53165076 1000002 E-3 361680United States Banks
53172356 1000002 E-3 361679United States Banks
53160407 1000002 E-4 569990Brazil Capital Markets
53163104 1000002 E-3 108620United States Capital Markets
53176029 1000002 E-4 352574United Kingdom Capital Markets
53167605 1000002 E-4 348919United States Chemicals
53158427 1000002 E-3 348447United States Consumer Finance
53178797 1000002 E-4 312177New Zealand Diversified Financial Services
53160630 1000002 E-3 342906Canada Insurance
53167540 1000002 E-3 374558United States Insurance
53164933 1000002 E-4 340502United States Oil, Gas and Consumable Fuels
Source: RatingsXpress: ESG Credit Indicators, S&P Global Market Intelligence. Data as of January 2022. For illustrative purposes only.
Global.
Example Use Case 2:
Step 3: Distribution of Financial Risk Profile for “AA-” rated entities within same industry
7
Number of AA- rated entities within
6 This is the entity with environmental

indicator of E-4
5
same industry
4
3
2
1
0
1 (minimal) 2 (modest) 3 4 (significant) 5 (aggressive) 6 (highly
(intermediate) leveraged)
Financial Risk Profile
Source: RatingsXpress: ESG Credit Indicators and RatingsXpress: Scores & Factors, S&P Global Market Intelligence. As of January 2022. For illustrative purposes only.
Global.
Example Use Case 2:
Step 5: Drill down into “ESG” Blurb within research article, under the “Environmental,
Social, And Governance” section
“We believe ____ has significant exposure to environmental factors, like its peers, notably
through its large offshore oil and gas operations……..
Except for a truly catastrophic event…. the financial impact of a localized environmental
incident, tighter regulation, or community opposition is somewhat limited, due to the
company’s massive scale, scope, diversification, and ability to reallocate capital.….
…… while European peers such as ____ are investing directly in renewable energy sources,
___’s strategy remains primarily focused on lowering the cost and lessening the
environmental impact …..as well as providing products to help customers reduce emissions.
The company expects oil and natural gas to continue to supply at least a portion of energy
demand growth over the next decade…”
Source: RatingsXpress: RatingsXpress®: Research, and S&P CreditStats, S&P Global Market Intelligence. As of January 2022. For illustrative purposes only.
Global.
Example Use Case 3:
Identify entities vulnerable to specific risk factors
Example: “Climate Transition Risks” filter
3. Assess overall
2. Shorlist entities with Environmental Credit
1. Download data via Xpressfeed dataitemID 1000002 = risks on the scale of E-1
“Climate transition risks” to E-5
5. Download relevant 4. Drill down into key

research report sections credit factors; assess 3. Assess company’s credit
for context behind the “buffer” to risk scenarios risks compared to peers with
data same SACP or ICR
Source:
= RatingsXpress: ESG Credit Indicators = S&P CreditStats
= RatingsXpress: Scores & Factors; and RatingsXpress on = RatingsXpress: Research

Xpressfeed, XpressAPI, and Snowflake
Global.
Example 3: Identify entities vulnerable to specific risk factors
Example: “Climate Transition Risks” filter

scores_id dataitem_id dataitem_value scores_review_id entity_id
53157960 1000003 Climate transition risks 298785 528669
Use these entity entity_id ESG Credit Indicator

IDs 528669 E-4
To link to other 361680 E-3
scores and 361679 E-3
factors, S&P 312177 E-4
119929 E-2
CreditStats,
Credit Ratings,
Creditwatch and
Outlook
Source: RatingsXpress: ESG Credit Indicators, S&P Global Market Intelligence. As of January 2022. For illustrative purposes only.
Global.
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presentation S&Pthe
requires Global
priorMarket
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Global.
APPENDIX
RatingsXpress Scores and Factors: Benchmark
credit risks vs. peers
Source: Criteria | Corporates | General: Corporate Methodology

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How ESG* Factors Impact

Gregg Lemos-Stein, CFA

Credit Risk Meredith Beddow

Gregg Lemos-Stein, CFA Meredith Beddow Michelle Cheong

Gregg Lemos-Stein, CFA

ESG – Environmental, Social and Governance. Source: S&P Global Ratings.

CICRA– Corporate industry and country risk score.

ESG Credit Indicators

For all public ratings ESG

Using a scale from 1 to 5

Providing additional disclosure, as they are

Renewable Power Generation Coal Company

 High and stable profitability from long-term committed government

Qualitative opinion of the entity’s long-term sustainability and readiness

Distribution of Social scores – Selected sectors – % of rated universe

Metals and Mining Overall Corporates

Quick link to tab

for set-up assistance or questions:

Indicators Data via

Flexible Delivery Channels

Vinay Dayal Dadu

1. Download data via enterprise

1. Download data via enterprise 2. Download

1. Download data via enterprise 2. Download 3. Assess company’s

SACP = Standalone Credit Profile. ICR = Issue Credit Ratings

1. Download data via enterprise 2. Download 3. Assess company’s

1. Download data via enterprise 2. Download 3. Assess company’s

= RatingsXpress: Scores & Factors; and RatingsXpress on 5. Download relevant

SACP = Standalone Credit Profile. ICR = Issue Credit Ratings

6 This is the entity with environmental

5. Download relevant 4. Drill down into key

= RatingsXpress: Scores & Factors; and RatingsXpress on = RatingsXpress: Research

Example: “Climate Transition Risks” filter

Use these entity entity_id ESG Credit Indicator

Permission to reprint or distribute any content from thisCopyright © 2021

Source: Criteria | Corporates | General: Corporate Methodology

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