MSCI downgrades Russia’s ESG rating

MSCI ESG Research says it has downgraded its ESG rating for Russia with immediate effect.

Russia’s sovereign ESG rating has been downgraded from BBB to B and Belarus from BB to B. MSCI says that in extraordinary circumstances, MSCI ESG Government Ratings may be adjusted via ‘Sovereign Watch’ event assessments which reflect the impact of major events that fall outside MSCI’s annual ESG Government Ratings process.

Russia’s new rating of B is the second lowest rating coming with a negative outlook with immediate effect. MSCI says it believes there is still significant downside risk to Russia’s ESG Government Rating and that it is possible that further developments could drive an additional downgrade.

In addition, it has initiated ‘Very Severe’ Sovereign Watch assessments for Russia’s ‘Economic Environment’ and ‘Financial Governance’ categories of the Social and Governance pillars, respectively, reducing those scores to reflect the potentially wide-reaching domestic impact of international sanctions and financial isolation on Russia’s economy.