ESG-Adjusted Credit Ratings

ESG Country Credit Rating

Sovereign bond ratings based on the GSCI

Conventional credit ratings miss critical ESG risks. See how sustainability-adjusted ratings reveal the true creditworthiness of 193 countries.

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Overrated

Some countries are overvalued based on over-simplified financial indicators

Undervalued

Emerging economies are regularly under-estimated

ESG evaluation

Significant rating gaps across 193 countries

ESG country ratings: a better analysis of investor risks & opportunities

Sovereign risk ratings –commonly referred to as credit rating – determine the level of interest a country has to pay for government loans and credits. It is therefore a very important parameter for every economy: it defines the costs of capital for new investments, whatever the nature of those investment may be. Credit ratings also affect investment decisions.

Sovereign risk ratings are calculated by a number of rating agencies, most notable (and defining) by the "three sisters": Moody's S&P, and Fitch. The publications and ratings of these three agencies therefore have a significant impact on the economy of a specific country.

Conventional credit ratings are calculated based on a mix of economic, political and financial risks – mainly current risks. However, current risks – like GDP – do not reflect the Framework that creates the current situation. Current risks integrate the wider environment – the ability and motivation of the workforce, the health of the population and natural environment (natural capital and man-made) that have caused the current situation. It is therefore questionable whether credit ratings truly reflect investment risks of investing in a specific country.

For a detailed analysis, download the ESG Sovereign Bond Report.

Conventional vs. Comprehensive Rating Frameworks

Traditional Credit Rating Factors

Country Credit Rating
Governance Criteria
Economic Developments
Financial Developments
Policy Criteria & Event Risk

Comprehensive ESG Framework (GSCI)

Sustainable Competitiveness
Governance Capital
Intellectual Capital
Natural Capital
Social Capital
Resource Efficiency
Economic Sustainability

Key Difference: Traditional credit ratings focus on 4 narrow financial and economic factors, while the GSCI evaluates 6 comprehensive capital dimensions with 280 quantitative indicators, providing a complete picture of sustainable competitiveness.

Why ESG-Adjusted Ratings Matter

Overvalued Countries

Resource-dependent economies, particularly oil exporters in the Middle East, receive higher conventional ratings that don't account for long-term sustainability risks and transition vulnerabilities.

Undervalued Countries

Emerging markets with strong environmental governance, social cohesion, and institutional quality often receive lower ratings due to GDP-centric methodologies.

Systemic Bias

Traditional ratings correlate heavily with GDP/capita, systematically rating poorer countries lower and charging them higher interest rates—creating a vicious credit trap.

Comprehensive Sovereign Ratings Analysis

Our ESG-adjusted ratings provide a more complete picture of sovereign risk, integrating environmental, social, and governance factors that traditional ratings overlook.

Read Full Analysis

Professional ESG Risk Management Dashboard

Access interactive ESG country risk data and analytics for 193 countries with real-time insights and custom reports.

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ESG credit ratings vs. conventional sovereign bond ratings

To compare currently used sovereign bond ratings, an ESG-adjusted credit rating has been computed based on the Global Sustainable Competitiveness (GSCI). The GSCI covers all themes insufficiently integrated in conventional credit ratings. The comparison between ESG and current ratings shows significant differences: Northern European (Scandinavia), Japan, the Middle East, the USA, but also China and India all would be downgraded while a number of lesser developed nations in South America, Eastern Europe and Africa would receive better credit rating. For more detailed information, download the ESG Sovereign Bond Rating Report.

ESG Ratings vs currently used country credit ratings:

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ESG sovereign bond ratings: frequently asked questions

How the ESG-adjusted sovereign ratings are built and how to read them.

What is an ESG sovereign bond rating?
An ESG sovereign bond rating assesses a country's creditworthiness while integrating environmental, social and governance performance alongside economic strength. SolAbility derives it from the Global Sustainable Competitiveness Index (GSCI), which evaluates 193 countries across 280 quantitative indicators, and maps the result onto the familiar AAA to D scale.
How is it different from a conventional credit rating?
Conventional ratings from Moody's, S&P and Fitch focus on a narrow set of financial and economic factors and correlate heavily with GDP per capita. The ESG rating adds the natural, social, governance and resource dimensions that shape a country's long-term ability to service its debt, giving a more complete picture of sovereign risk.
How is the ESG rating calculated?
It is derived from a country’s overall GSCI score across six capital dimensions (natural capital, resource efficiency, intellectual capital, governance, social capital and economic sustainability), then translated to a rating grade. The conventional rating shown for comparison is the average of the current Moody’s, S&P, Fitch and DBRS ratings, expressed on the S&P/Fitch scale.
Why are some countries rated higher and others lower than by the agencies?
Resource-dependent and high-income economies often receive high conventional ratings that do not fully price in transition and sustainability risks, so their ESG rating can be lower. Countries with strong governance, social cohesion and environmental performance but a modest GDP can be under-rated by conventional methodologies, so their ESG rating can be higher.
What do the colours on the map mean?
In the GSCI-vs-conventional view, green means the GSCI sovereign rating is higher than the conventional bond rating and red means it is lower, with a deeper shade for a larger gap. Grey means no conventional rating is available. The rating-grade view instead shades each country from green (AAA) to red (D) by its GSCI sovereign rating.
How often are the ratings updated?
The ratings are refreshed annually with each new edition of the GSCI. The current map reflects the GSCI 2026 edition, based on 2025 data.
Why do ESG sovereign ratings matter for investors?
Where an ESG rating diverges from the conventional rating, it can signal mispriced sovereign risk: countries whose sustainability fundamentals are stronger or weaker than the market currently assumes. This helps investors identify opportunities and risks before conventional ratings adjust.

Download the Full ESG Sovereign Bond Report

Get comprehensive ESG credit ratings and analysis for 193 countries

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