Introduction

In an era defined by climate change, social equity, and corporate accountability, traditional credit risk models that focus solely on financial metrics are no longer sufficient. ESG-Driven Credit Risk Analysis represents a paradigm shift, integrating non-financial Environmental, Social, and Governance factors to provide a more holistic and forward-looking assessment of a borrower's creditworthiness. This Beyond the Balance Sheet: Training Course on ESG-Driven Credit Risk Analysis is a comprehensive 10-day program designed to equip financial professionals with the skills needed to navigate this evolving landscape and identify both risks and opportunities that were previously overlooked.

This course will guide you through the latest frameworks, data sources, and methodologies for integrating ESG factors into your credit analysis. You will learn to identify material ESG risks, evaluate their impact on financial performance, and develop robust, sustainable credit decisions. By the end of this training, you will be able to move beyond conventional analysis, enabling you to build more resilient portfolios, comply with new regulations, and position your organization for long-term success in the world of sustainable finance.

Duration: 10 Days

Target Audience

• Credit analysts and managers
• Financial risk managers
• Investment bankers and portfolio managers
• Corporate treasurers
• Data scientists and quantitative analysts
• Compliance officers and regulators
• Sustainability and ESG professionals
• Business intelligence professionals
• Academics and students in finance
• Anyone involved in credit assessment

Objectives

• Understand the core concepts of ESG and its relevance to credit risk.
• Identify and assess material ESG risks across various sectors.
• Differentiate between qualitative and quantitative ESG data.
• Learn how to source and evaluate ESG data from various providers.
• Integrate ESG factors into traditional financial models.
• Use case studies to apply ESG analysis in real-world scenarios.
• Understand emerging regulatory frameworks for sustainable finance.
• Communicate complex ESG risks to internal and external stakeholders.
• Develop a proactive strategy for managing ESG-related credit exposure.
• Stay current with future trends in sustainable finance.

Course Modules

Module 1: Foundations of ESG and Credit Risk

• What are Environmental, Social, and Governance (ESG) factors?
• The evolution of ESG in the financial sector
• The link between ESG factors and creditworthiness
• The limitations of traditional credit analysis
• The business case for ESG integration

Module 2: ESG Data and Rating Agencies

• Introduction to the ESG data landscape
• Key ESG data providers and their methodologies
• The role of ESG ratings and scores in credit analysis
• Challenges with data availability and comparability
• The importance of data transparency

Module 3: Analyzing Environmental Factors (E)

• Climate change risk: physical vs. transition risks
• Natural resource scarcity and water stress
• Pollution and waste management
• The carbon footprint of a business
• Regulatory and policy risks

Module 4: Analyzing Social Factors (S)

• Human rights and labor practices
• Diversity, equity, and inclusion
• Customer and product safety
• Community relations and social license to operate
• Data security and privacy

Module 5: Analyzing Governance Factors (G)

• Board structure and independence
• Executive compensation and remuneration
• Shareholder rights and transparency
• Business ethics and anti-corruption measures
• Risk management and internal controls

Module 6: ESG Materiality Assessment

• The concept of financial materiality in ESG
• Using materiality maps to identify key issues
• Sector-specific ESG risk profiles
• Double materiality and impact analysis
• Prioritizing ESG factors in analysis

Module 7: Quantitative Integration Methodologies

• Adjusting financial models for ESG risks
• Creating an ESG credit scoring framework
• Using ESG data to model probability of default (PD)
• The impact of ESG on loss given default (LGD)
• Applying stress testing and scenario analysis

Module 8: Qualitative Integration Techniques

• Conducting qualitative research on a company's ESG performance
• The importance of management interviews
• Assessing a company's ESG strategy and commitments
• The role of public perception and brand reputation
• Using narrative analysis to supplement quantitative data

Module 9: Sector-Specific ESG Analysis

• ESG risks in the energy and utilities sector
• ESG in consumer goods and retail
• ESG for financial institutions and real estate
• ESG factors in technology and healthcare
• Analyzing ESG in the sovereign and sub-sovereign space

Module 10: Regulatory and Reporting Frameworks

• Key global and regional ESG regulations
• The role of disclosure standards (e.g., SASB, TCFD)
• The impact of regulatory changes on credit risk
• Reporting requirements for financial institutions
• Preparing for future regulatory shifts

Module 11: Case Studies in ESG Credit Risk

• Analysis of a company with strong ESG performance
• Analysis of a company with significant ESG-related controversies
• Case study on climate transition risk
• Case study on social risk and labor issues
• Case study on governance failures and their credit impact

Module 12: ESG and Green/Sustainable Bonds

• The rise of sustainable debt instruments
• The role of ESG in green bond issuance
• Evaluating the creditworthiness of green bonds
• Challenges in greenwashing and authenticity
• The future of sustainable fixed income

Module 13: The Evolving Role of Credit Rating Agencies

• How major CRAs are integrating ESG into ratings
• Differences in approach among agencies
• Understanding ESG relevance scores
• The potential for dedicated ESG ratings
• Communicating with CRAs on ESG performance

Module 14: Technology and Future Trends

• Using AI and machine learning for ESG data analysis
• The role of Big Data in uncovering hidden risks
• The importance of supply chain ESG due diligence
• The impact of climate-related financial disclosures
• The future of financial markets and sustainability

Training Approach

This course will be delivered by our skilled trainers who have vast knowledge and experience as expert professionals in the fields. The course is taught in English and through a mix of theory, practical activities, group discussion and case studies. Course manuals and additional training materials will be provided to the participants upon completion of the training.

Tailor-Made Course

This course can also be tailor-made to meet organization requirement. For further inquiries, please contact us on: Email: info@skillsforafrica.org, training@skillsforafrica.org  Tel: +254 702 249 449

Training Venue

The training will be held at our Skills for Africa Training Institute Training Centre. We also offer training for a group at requested location all over the world. The course fee covers the course tuition, training materials, two break refreshments, and buffet lunch.

Visa application, travel expenses, airport transfers, dinners, accommodation, insurance, and other personal expenses are catered by the participant

Certification

Participants will be issued with Skills for Africa Training Institute certificate upon completion of this course.

Airport Pickup and Accommodation

Airport pickup and accommodation is arranged upon request. For booking contact our Training Coordinator through Email: info@skillsforafrica.org, training@skillsforafrica.org  Tel: +254 702 249 449

Terms of Payment: Unless otherwise agreed between the two parties’ payment of the course fee should be done 10 working days before commencement of the training.