Sustainable Fitch secured the fixed income 'ESG research of the year' award for the second year in a row, impressing the judges with its diverse content for the fixed income market – including transition finance – based on their ESG Ratings product launched in 2021.
Sustainable Fitch research head Marina Petroleka told Environmental Finance that she was particularly proud of a report from July 2022 analysing the "flashpoints" between political risk and climate-related issues – how both transition policy risk and physical climate risk can ignite political instability.
She said political risk was an area that investors find impactful, but "more often than not find difficult to contextualise or analyse from an ESG lens". As a result, the report looked to explore "political issues that may arise from the low-carbon transition and the implications for the pace of climate policy adoption".
After a Sustainable Investment Awards judge remarked on the labelled bond research undertaken by Sustainable Fitch, Petroleka said she was particularly pleased with their transition finance work in this area.
"An important moment for the market was in November 2022, when the government of Japan released a comprehensive framework for transition finance and transition bonds picked up some pace," she said.
Fitch published a report in response which Petroleka said did a "deep dive" into the transition finance market on the whole but also "transition bonds more specifically as we identified this as a potential area of interest" – particularly in Asia Pacific.
Petroleka said Fitch is continuing to focus analysis on transition finance as it is a topic that is "front of mind for investors". Other fixed income research topics that Fitch is focused on in the future include biodiversity and a series on 'sustainable cities'.
"'Sustainable Cities' is the UN Sustainable Development Goal most often associated with impact and responsible investment strategies and labelled debt," Petroleka said. "It is an area of immense importance, but under-analysed holistically as an impact investment theme."
