July 22, 2020

Covid-19: Accelerating “ESG” Focus for Credit Ratings

A recent 12-page Moody’s report says that the Covid-19 pandemic has increased the likelihood that ESG will affect credit ratings over the long term – i.e., beyond 12-18 months from now. The report puts these trends into three buckets: risk preparedness for global risks, social considerations related to healthcare access & economic inequality, and a shift from shareholder primacy to stakeholder needs. Specifically, it predicts that in addition to the “usual suspects” of governments, companies in the healthcare industry and carbon-intensive companies, all sectors have the potential for greater scrutiny of these areas:

– Risk management practices
– Climate change & environmental risks
– Healthcare access & affordability
– Economic & social inequality
– Corporate sustainability & governance practices
– Investor focus on ESG

Covid-19: Impact on Disclosure Controls

After Corp Fin supplemented its Covid-19 disclosure guidance last month to suggest what information companies should be considering for pandemic-related disclosure, we have been hearing from members grappling with their quarterly disclosure controls processes for their upcoming reports. To capture reportable events throughout the business, some are relying on questionnaires – like this one that we’ve posted in Word.

In our webcast last week – “Coronavirus: Next Steps For Disclosure & Governance” – Keir Gumbs also emphasized that companies should be thinking about how the “work from home” environment is affecting internal controls and disclosure controls. In addition to the topics covered in Corp Fin’s guidance, this Deloitte blog suggests thinking about these potential issues (also see this Freshfields blog):

– Store or facility closures
– Loss of customers or customer traffic
– The impact on distributors
– Supply chain interruptions
– Production delays or limitations
– The impact on human capital
– Regulatory changes
– The risk of loss on significant contracts

Quick Poll: Are You Reviewing Your Disclosure Controls?

Please participate in this anonymous poll:

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Liz Dunshee