Fitch Ratings has assigned ESG Vulnerability Scores to 100 utilities based in EMEA.

ESG.VS assess the relative vulnerability of companies creditworthiness to a stress scenario incorporating risks from ESG issues up to 2050. For the utilities sector, the main driver of ESG vulnerability is the transition to a low-carbon economy.

The utilities’ ESG.VS largely range between 15 and 60 in the period to 2050, on a scale of zero to 100. This shows that almost all companies are actively addressing ESG issues and the energy transition. Thermal generation generally represents a limited share of integrated utilities’ EBITDA, while the EBITDA contribution from activities with very low ESG vulnerability, such as renewables or electricity transmission and distribution, is increasing.

For each activity, the anchor is the time-profiled score as published in Fitch’s pilot ESG.VS report “Utilities – Long-Term ESG Vulnerability Scores” in October 2020. The companies’ scores are mainly a function of their business mix, measured by EBITDA contribution at the end of Fitch’s forecasting horizon of three to five years. Utilities with exposure to higher-risk activities, such as thermal generation and coal, have a higher ESG.VS. Sector and group modifiers, which accommodate company-specific aspects, generally result in limited variations to the baseline scores defined by the business mix.