Business · Companies · 2 hrs ago
High sustainability ratings are linked to lower financing costs
Iberdrola and Acciona are Spanish companies with high sustainability ratings and sustainable financing.
A study by MSCI examined more than 4,300 issuers from 2015 to 2024, comparing ESG ratings with financing costs.
Companies with the highest ratings had average capital costs of 6.8%, against 7.9% for the lowest-rated group.
The study found that major rating changes of two or more levels were followed by lower or higher financing costs, depending on whether ratings improved or fell.
Green financing can offer lower interest rates or longer repayment periods.
The findings show a link between stronger sustainability ratings and cheaper financing, though they do not establish that every company will benefit.
Companies that manage financially important sustainability risks also tended to have more stable sales and cash flows than peers with weaker ESG results.
A study of more than 4,300 issuers found a historical link between higher ESG ratings and lower financing costs.
Companies in the highest-rated group had an average cost of capital of 6.8%, compared with 7.9% for those in the lowest-rated group.
The study found that significant ESG rating changes of two or more levels were followed by changes in the cost of capital.
Iberdrola and Acciona are cited as Spanish examples of companies with high ESG ratings and sustainable financing.
- Who
- More than 4,300 issuers were included in the study. Iberdrola and Acciona are cited as examples.
- What
- A study found that higher ESG ratings were historically linked to lower financing costs.
- When
- The study examined issuers from 2015 to 2024.
- Where
- The analysis covered issuers in multiple markets; Spain is cited for the company examples.
- Why
- The article links stronger sustainability ratings with lower financing costs and says significant rating changes preceded changes in those costs.
This story does not have two clearly opposing sides.
This story does not have a timeline yet.
- Issuers studied
- More than 4,300
- Study period
- 2015–2024
- Highest ESG-rated group
- 6.8% average cost of capital
- Lowest ESG-rated group
- 7.9% average cost of capital
- Difference
- 1.1 percentage points
- Spanish examples
- Iberdrola and Acciona
1 source
What people are saying
This relationship remained even after controlling for country of origin, sector, credit quality and financing currency.
For CFOs and treasury teams, the results provide new information about the historical relationship between sustainability risk management and financing costs.