Euler Hermes is the world’s first trade credit insurer to integrate ESG into its country risk ratings. As a company, Euler Hermes also attaches a great importance to the impact of its activities on the environment, the society and governance issues.
Around the world, the importance of ESG has reached a tipping point. The acronym stands for “Environmental”, “Social” and “Governance”. More and more businesses and investors are aware that these themes will have a major impact on their future growth, market shares and profits.
However, what they think less of is that ESG themes also have an effect on companies' payment risks. For example, there is a positive correlation between severe climate-related events and non-payment risks. Over time, this correlation will become more obvious: in a region where there is more flooding due to global warming, the supply chain will inevitably be interrupted more often. Likewise, companies can have problems due to increasing social unrests. At the same time, new non-payment risks emerge for companies with a higher carbon footprint, as it will become more difficult for them to obtain financing in the future (and such financing will become more expensive).
Worldwide first
In this context, Euler Hermes decided to include a set of indicators linked to environmental sustainability in its country risk ratings as from 2020. In addition, a social media sentiment analysis has been added to its political risk rating. Governance issues, such as the regulatory and legal frameworks and the control of corruption have already been included in Euler Hermes’ country risk ratings since 2003.
Hence, Euler Hermes the first trade credit insurance company to include ESG indicators for all ESG-related matters into its rating methodology. The rating includes more than 140 indicators and is available for 194 countries.
Ludovic Subran, Chief Economist of Allianz and Euler Hermes:
Set the ESG standard for trade finance
Euler Hermes supports the economy by helping businesses to grow. By striving for the best ethical standards and caring for employees and clients.
At Euler Hermes, we have established three key pillars that aims to integrate ESG fully into our company DNA:
- Green transactions: Support a decarbonized world by mitigating and adapting to climate change risks, and encouraging greener transactions.
- Awareness: We engage and support companies to develop in a more sustainable way.
- Set new standards: Integrate ESG risks in the assessment of buyers’ credit worthiness and countries’ credit risk.
Florence Lecoutre, Member of the Board of Management of Euler Hermes Group:
Corporate Social Responsibility in times of Covid-19
As an organization, Euler Hermes also attaches a great importance to the impact of its activities in the field of ESG. In this way, the company continuously tries to reduce its ecological footprint. Euler Hermes BeLux recently received the “Eco-dynamic company” label from the Brussels-Capital Region. The label promotes eco-management, particularly in terms of waste management and prevention, rational use of energy, management of employee mobility, etc.
During the coronavirus crisis, Euler Hermes BeLux continued its activities in the area of corporate social responsibility by financially supporting institutions active in the fight against Covid-19. This includes following organizations from the social and medical (research) world: Belgian Red Cross, Erasmus Fund (ULB), Think Pink, Wit-Gele Kruis, Familienhilfe Ostbelgien, Bednet and ClassContact.
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