The Credit Rating Agencies

Abstract

The credit rating industry has become a central component of the financial architecture over the years. Whilst this has not always been the case for the predominant 'Big Three' credit rating agencies of Standard & Poor's (now S&P Global), Moody's, and Fitch Ratings, there were reasons for this-the important aspect to understand is that their role has been central to the financial architecture for nearly 200 years in various guises. The question for our analysis here is whether that role will be central to the new financial architecture, one theoretically based upon sustainability and forward-thinking finance.The leading credit rating agencies have, since the Financial Crisis, been jostling for supremacy ahead of the predicted 'mainstreamisation' of the concept of sustainable finance and investment. The acquiring of data service companies has been continuing at a rapid pace and shows absolutely no signs of slowing down; at the time of writing, S&P are poised to make the biggest purchase of a company in 2020 globally, reportedly agreeing to spend $44 billion on acquiring HIS Markit. 1 If this acquisition goes through as expected, then it will be further evidence of the concerted approach the credit rating giants are taking.However, what does this approach mean? Does it really put the credit rating industry in the best position to serve the mainstreamisation of sustainable business/finance/investment? Is that even their aim? To find out, there are a number of things we can focus on. The main aspect