MSCI ESG Research has downgraded Russia’s ESG Government Rating from B to CCC with immediate effect.
CCC is the lowest rating and follows the downgrade from BBB to B on February 28. MSCI says the move reflects the further financial isolation of Russia in the last week and higher uncertainty around key metrics. Russia’s ‘Economic Environment’ and ‘Financial Governance’ risks include:
1) the decision by US, UK, Canada, France, Germany, Italy and the European Commission to prevent the Russian central bank from using its international reserves (valued at USD 630bn in January 2022);
2) sanctions placed on Russian individuals and companies by the US, the EU, and other countries;
3) the barring of seven major Russian banks from the SWIFT payments system;
4) the withdrawal of major international companies, including Visa, MasterCard, BP, KPMG, PwC and HSBC.
MSCI has adjusted Russia’s ‘Economic Environment’ and ‘Financial Governance’ scores downward to zero, in line with its ‘Political Governance’ score, leading to an overall ESG Government Rating downgrade to CCC.