Abstract
In this chapter, the aim is to develop some potential hypotheses for how the relationship between the parties will develop. The first issue developed is that the Initiative must take great care in progressing with the relationship, and that to protect the ‘movement’, certain safeguards need to be established. One such proposed method is the re-imagining of a Dodd-Frank creation which would enable the smaller agencies to actively participate in the ‘responsible investment’ movement, whilst also creating a system of ‘checks and balances’ for on looking investors where the CRAs are concerned. The chapter concludes by airing some of the ‘concerns’ regarding the nature of the CRAs and their potential impact on the development of the ‘Responsible Investment’ movement.
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Notes
- 1.
Daniel Cash, ‘Credit Rating Agency Regulation: Has the “Rule 17g-5 Program” Worked?’ [2018] 29 International Company and Commercial Law Review 7 464–74.
- 2.
The Securities Exchange Act of 1934 17 CFR 240 17g.
- 3.
Securities and Exchange Commission, Report to Congress on Assigned Credit Ratings (2012) 54.
- 4.
James Weston, ‘An Improved Regulatory Framework for Credit Rating Agencies?’ [2013] 2 Global Credit Review: Risk Management Institute 21.
- 5.
Liangrong Zu, ‘Global Initiative for Sustainability Ratings’ in Samuel O. Idowu, Nicholas Capaldi, Matthias S. Fifka, Liangrong Zu, and René Schmidpeter (eds.), Dictionary of Corporate Social Responsibility: CSR, Sustainability, Ethics and Governance (Springer 2015) 280.
- 6.
Malcom Campbell-Verduyn, Professional Authority After the Global Financial Crisis: Defending Mammon in Anglo-America (Springer 2017) 59.
- 7.
Kern Alexander, ‘The Risk of Ratings in Bank Capital Regulation’ [2014] 25 European Business Law Review 2 295–313.
- 8.
Daniel Cash, ‘Sustainable Finance Ratings as the Latest Symptom of “Rating Addiction”’ [2018] 3 Journal of Sustainable Finance & Investment 254.
- 9.
Herwig P. Langohr and Patricia T. Langhor, The Rating Agencies and Their Ratings: What They Are, How They Work, and Why They Are Relevant (Wiley 2010) 429.
- 10.
Cash (n. 8) 243.
- 11.
For a more detailed account of the three Basel Accords, see Michael B. Gordy, Erik A. Heitfield, and Jason J. Wu, ‘Risk-based Regulatory Capital and the Basel Accords’ in Allen N. Berger, Philip Molyneux, and John O. S. Wilson (eds.), The Oxford Handbook of Banking (Oxford University Press 2015).
- 12.
Raquel G. Alcubilla and Javier R. del Pozo, Credit Rating Agencies on the Watch List: Analysis of European Regulation (Oxford University Press 2012) 86.
- 13.
Ibid.
- 14.
Luisa Izzi, Gianluca Oricchio, and Laura Vitale (eds), Basel III Credit Rating Systems: An Applied Guide to Quantitative and Qualitative Models (Palgrave Macmillan 2012).
- 15.
Caroline Binham, ‘Banks Score Victory on Use of Ratings in Capital Calculations’ [2015] Financial Times (December 10).
- 16.
Mohammed Hemraj, Credit Rating Agencies: Self-Regulation, Statutory Regulation and Case Law Regulation in the United States and European Union (Springer 2016) 21.
- 17.
Jennifer Thompson, ‘Asset Managers Engage in ESG “War for Talent”’ [2018] Financial Times (June 16).
- 18.
Lawrence J. White, ‘Markets: The Credit Rating Agencies’ [2010] 24 The Journal of Economic Perspectives 2 211
- 19.
Ibid.
- 20.
Moody’s , Moody’s Completes Acquisition of Bureau van Dijk (2017).
Bibliography
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Cash, D. ‘Sustainable Finance Ratings as the Latest Symptom of “Rating Addiction”’ [2018] 3 Journal of Sustainable Finance & Investment 242–58.
Gordy, M. B., Heitfield, E. A., and Wu, J. J. ‘Risk-Based Regulatory Capital and the Basel Accords’ in Berger, A. N., Molyneux, P., and Wilson, J. O. S. (eds.), The Oxford Handbook of Banking (Oxford University Press 2015).
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Moody’s, Moody’s Completes Acquisition of Bureau van Dijk (2017) http://ir.moodys.com/news-and-financials/press-releases/press-release-details/2017/Moodys-Completes-Acquisition-of-Bureau-van-Dijk/default.aspx. Accessed 25 July 2018.
Securities and Exchange Commission, Report to Congress on Assigned Credit Ratings (2012) https://www.sec.gov/news/studies/2012/assigned-credit-ratings-study.pdf. Accessed 21 July 2018.
The Securities Exchange Act of 1934 17 CFR 240 17g.
Thompson, J. ‘Asset Managers Engage in ESG “War for Talent”’ [2018] Financial Times (June 16) https://www.ft.com/content/0695124e-6eec-11e8-852d-d8b934ff5ffa. Accessed 1 July 2018.
Weston, J. ‘An Improved Regulatory Framework for Credit Rating Agencies?’ [2013] 2 Global Credit Review: Risk Management Institute 21.
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Zu, L. ‘Global Initiative for Sustainability Ratings’ in Idowu, S. O., Capaldi, N., Fifka, M. S., Zu, L., and Schmidpeter, R. (eds.), Dictionary of Corporate Social Responsibility: CSR, Sustainability, Ethics and Governance (Springer 2015).
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Cash, D. (2018). The Future for the Relationship. In: The Role of Credit Rating Agencies in Responsible Finance. Palgrave Studies in Impact Finance. Palgrave Pivot, Cham. https://doi.org/10.1007/978-3-030-03709-3_5
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