ESG performance and credit risk go hand in hand: Hermes
Hermes Investment Management, the UK-based £28.5bn ($37bn) fund manager, has identified a clear link between company performance on environmental, social and governance (ESG) issues and their credit risk. By comparing four credit-default swap (CDS) indices with its own ESG risk measurement or QESG score, Hermes found that those companies with low QESG were most likely to have the broadest CDS spreads, and highest level of credit risk. Those companies with the highest QESG scores and wide spreads tended to be the best performers.

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