Browsing by Author "Nurminen, Julia"

This paper provides an assessment of how the impact of ESG exposures on credit risk is currently perceived in commercial mortgage-backed securities in light of the applicable regulatory framework consisting of different modalities. This is done with a view of understanding whether the binding and non-binding regimes relating to credit rating agencies and commercial mortgage-backed securities have separately and together succeeded in ensuring that the impact of relevant and material ESG-related considerations are accounted for in a systematic, harmonised and transparent manner when rating the said instruments in an EU context. The study of commercial mortgage-backed securities and relevant and material ESG exposures provide an ample opportunity to examine ESG as a credit risk from a legal viewpoint. This is because focusing on the said structured products accommodates the simultaneous legal analysis of the intertwined concepts of securitisation, ESG and credit rating agencies. Such analysis is fundamental given the conflicts between wider EU policy objectives, legal uncertainty pertaining to ESG and the failures of credit rating agencies as quasi-regulators and gatekeepers of capital markets. Due to the interdisciplinary nature of the research presented in this paper, the discussion shall touch on matters that bear relevance in terms of real economy and the technicalities and complexities of credit risk and securitisation. Therefore, the paper positions itself at the very heart of praxis and how the diverse range of resulting challenges can be addressed by means of law by applying primarily a polycentric method. This paper will argue that whilst credit rating agencies recognise the concept of ESG credit risk, it remains largely unaddressed in the legally binding regimes applicable to CMBSs and their ratings. Therefore, the paper shall conclude that the instruments controlling rating agencies, ratings and the structured products do not currently constitute a framework which accounts for ESG-related exposures in a systematic, harmonised and transparent manner.