ESG Rating

ESG Rating Model

CGD is the number one bank in Portugal with an ESG Rating Model for its corporate clients from all activity sectors.

Banking Institutions play a key role in the development of Sustainable Finance, that is, a type of funding which, aside from considering traditional financial aspects such as profitability and financial robustness in the assessment of companies’ investment projects, also accounts for non-financial aspects linked with ESG (Environmental, Social and Governance) criteria, such as transition risk, physical risk, work conditions and governance practices.

Considering the importance of this subject, it has become critical to define and implement a new index, named ESG Rating, enforced through the inclusion of ESG criteria into decision-making processes.

The main purpose of this Rating is to support companies in their process of transition towards a greener, more inclusive economy, providing input so that they improve their ESG Rating and allocate their capital flows to sustainable finance strategies, ensuring value maximization for the various stakeholders.

ESG Rating allows:

i) For the assessment and ranking of companies in terms of sustainability, according to a rating scale (Strong, Good, Satisfactory or Weak), thus being able to contribute to the definition of credit pricing;

ii) For combining this assessment of non-financial aspects with the traditional financial assessment (split into investment grade ratings and non-investment grade ratings), generating a matrix with four possible sustainable finance strategies: Optimizing, Capturing, Pondering or Divesting.

The ESG Rating Methodology considers:

i) Environmental Criteria, namely in what concerns the climate, such as the assessment of physical risk (general-to-specific, country, region, activity, company) and transition risk (greenhouse gas emissions, carbon intensity, energy costs and investment in R&D);

ii) Social Criteria, such as gender equality, remuneration level and investment in training;

iii) Governance Criteria, such as the quality of partners/shareholders and that of the management.

The ESG Rating Model was built based on the most recent data available in national and international platforms and databases. The development and implementation of an ESG Rating Model must obviously comply with the recommendations issued by International Regulatory and Supervisory Entities, during this work in progress.

CGD’s ESG Rating is disruptive and innovative within the national market, since, in a simple, objective and holistic fashion, it allows for the automatic rating of circa 300,000 companies and circa 20 Bn bank loans.

The ESG Rating is an essential and effective tool for CGD’s communication strategy and is also an additional differentiating factor in investment and financing decisions, reiterating the Institution’s core values of transparency, rigor and professionalism. It decisively contributes to CGD’s reputation as a leader in what concerns sustainable finance strategies, to a better risk management and a better medium-term financial performance.

Through objective metrics, the ESG Rating allows for promoting a portfolio of banking products and services with a positive impact on the Company in alignment with the targets of the Paris Agreement and those of the European Green Deal.

Testimonies (portuguese only)

Cecília Gaspar – General Manager - Risk | Rating Division
Cláudia Costa Pereira | Rating Division

Caixadirecta

Caixadirecta

ESG Rating

ESG Rating Model

CGD is the number one bank in Portugal with an ESG Rating Model for its corporate clients from all activity sectors.