High Level Meeting on the Role of Credit Rating Agencies in the implementation of the 2030 Agenda for Sustainable Development

21.03.2022

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Source : United Nations, New York, 21 March 2022

 

Credit ratings play an important role in international capital markets as they provide creditors with assessments of a debtor’s relative risk of default. Nonetheless, inaccurate ratings can impact the cost of borrowing and the stability of the international financial system, as demonstrated during the 2008 global financial crisis. During the economic crisis that emerged as a result of the COVID-19 pandemic, attention has returned to the role of credit ratings on debt sustainability and stability.

In the outcome document of the 2021 meeting of the Economic and Social Council Forum on Financing for Development Follow-up, Member States committed to “explore options to engage credit-rating agencies in the context of the COVID-19 recovery and implementation of the 2030 Agenda” (E/FFDF/2017/3, para. 37). The Inter-agency Task Force on Financing for Development held an expert group meeting to share views on the challenges in November 2021.

To follow-up on these discussions and further contribute to potential enhancements to the credit rating architecture, the United Nations Under Secretary General for Economic and Social Affairs will convene a high-level meeting to discuss how credit ratings and other sources of improved information could better contribute to financing for sustainable development and the stability of the international financial system. The meeting will take place 21 March 2022 in a virtual format.

 

Guiding questions

  • What role do credit rating agencies play in the ecosystem of information provision and analysis relied on by capital markets? What gaps are left in reliable information provision that may undermine the provision of finance for long-term, sustainable and stable investment in sustainable development?

  • Should CRAs adopt further changes in their rating methodologies in order to adapt to the changing world (e.g., technology evolution, increased risk and resilience concerns)? What incentives do they have to make changes, and should the public sector take action to incentivise change, given the rating market dynamics?

  • What changes can be adopted by investors to make better use of the information provided by CRAs? What incentives might be needed to spur adoption of such changes?

  • Are the current regulatory regimes for CRAs sufficiently attuned to sustainable development questions? How should they evolve as markets change and financial regulators increasingly focus on ESG criteria?

  • How should the international system address gaps in the ecosystem for investor information? Are structural or institutional reforms needed and politically viable?

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