Environmental, social, and governance (ESG) factors are integral to corporate credit analysis. We examine S&P’s adoption (2021) and subsequent withdrawal (2023) of numeric credit-related ESG indicators disclosed within issuer credit-rating reports. We document three main results. First, ESG risk is already embedded in rating levels: more adverse indicators are associated with lower contemporaneous and next-year ratings. Second, the indicators are forward-looking, and higher ESG scores predict more ESG incidents and higher subsequent GHG emissions. Third, in bond markets, displaying the indicators coincides with narrower bid-ask spreads, lower price dispersion, and reduced yield volatility. Overall, prominently displayed, credit-oriented ESG indicators convey incremental information beyond narratives and improve the fixed-income information environment.
