"My key message is that ESG has moved from reputation to the core of risk management and competitiveness," the CEO of CRIF SynESGy Ratings Marco Macallari has said ahead of his address at the upcoming 3rd Credit Risk & Sustainability Conference in Nicosia.
As the expert goes on to note in a relevant interview, "The evidence is tangible: companies with stronger ESG profiles show 17% lower credit risk and receive 13% more lending, while green-bond issuers can benefit from funding costs up to 40 basis points lower."
Among other things, Macallari also weighs in on extent to which ESG ratings are now becoming a genuine credit-risk indicator and how companies should change in their corporate strategy as ESG standards become more structured and ratings more widely used in financial decision-making.
At the 3rd Credit Risk & Sustainability Conference, you will address how evolving standards are shaping ESG ratings, risk and corporate strategy. What are the key messages you intend to highlight, and how mature do you consider the Cypriot market in responding to these developments?
My key message is that ESG has moved from reputation to the core of risk management and competitiveness. The evidence is tangible: companies with stronger ESG profiles show 17% lower credit risk and receive 13% more lending, while green-bond issuers can benefit from funding costs up to 40 basis points lower. The European framework now demands greater transparency on methodologies, data and conflicts of interest. A genuinely private ESG score—not intended for public disclosure or distribution—may fall outside the Regulation, but this does not ensure equivalent quality. Such outputs may lack the governance, methodological transparency and safeguards expected from a regulated provider. CSR combines these protections with an integrated, scalable framework; this is especially relevant for Cyprus, where fossil fuels still account for about 73% of energy consumption.
To what extent are ESG ratings now becoming a genuine credit-risk indicator rather than primarily a sustainability or compliance tool? Are we reaching the point where a company’s ESG profile can materially affect its access to finance, the cost of funding or other financing terms?
ESG ratings are becoming genuine credit-risk indicators because environmental, social and governance factors affect cash flows, asset values, operating continuity and repayment capacity. The evidence is tangible: companies with stronger ESG profiles show 17% lower credit risk and receive 13% more lending, while green-bond issuers can benefit from funding costs up to 40 basis points lower. As previously said, regulation does not automatically ban private scores produced by non-authorised providers when they are not intended for disclosure or distribution. However, using them in bank processes may require additional validation, methodological review and documentary checks, increasing cost and operational complexity. CSR offers a stronger alternative: independent governance, transparent and consistent methodologies, conflict-of-interest safeguards and native integration across ratings, scores, assessments and data, and, more important, consistency with ratings.
As ESG standards become more structured and ratings more widely used in financial decision-making, what should companies change in their corporate strategy today? Which ESG-related risks do you believe boards and management teams still tend to underestimate?
Companies should embed ESG into strategic planning, capital allocation, procurement and product decisions rather than treat it as a reporting exercise. Boards need a focused dashboard—emissions and energy intensity, physical-risk exposure, water and waste, workforce safety, supply-chain controls and compliance—with accountable owners, targets and a clear link to the transition plan. They should also ask whether the underlying assessment is produced with independent governance and effective management of conflicts of interest. The most underestimated risks are often physical climate events, carbon and energy-price sensitivity, supplier disruption, weak data controls and obsolete business models. Good governance means using consistent, traceable signals early—before they become losses—to prioritise investment and protect long-term competitiveness.
For SMEs, complying with increasingly sophisticated sustainability and data requirements can be particularly challenging. How can banks and rating providers integrate ESG criteria into their assessments without creating a disproportionate burden for smaller businesses or restricting their access to finance?
The key principle is proportionality. SMEs should not be asked to reproduce the reporting systems of large corporates. A practical model combines a short VSME-aligned questionnaire with verified external information, sector benchmarks and automated analytics, reserving deeper analysis for higher-risk cases. Our framework can draw on more than 140 ESG KPIs and KRIs, while the streamlined score focuses on 51 final indicators: 25 environmental, 9 social and 17 governance. Because ratings, scores, assessments, analytics and raw data share the same methodology, information can be collected once and reused consistently across credit, portfolio and regulatory processes. Company-specific questionnaire data can improve measured ESG adequacy by around 15%, reducing burden without sacrificing robustness or comparability.
Data is one of the central themes of this year’s conference. How important is the quality and availability of ESG data in determining the reliability of ratings, and where do you currently see the biggest data gaps for companies?
Data quality is the foundation of rating reliability. We assess completeness, consistency, recency, traceability and sector relevance, combining company disclosures with documentary evidence, business information and climate scenarios. Reliability also depends on process quality: common methodologies, documented controls, information security and repeatable production standards. This is why certified processes, as ours are—such as ISO 9001 for quality and traceability and ISO 27001 for information security—are relevant when ESG assessments are produced at scale. The main gaps remain Scope 3 emissions, site-level hazards, building energy performance, workforce safety, water and waste, and transition plans. Estimates can help, but they must be transparent and progressively replaced by verified company-level data.
Looking ahead, do you expect ESG ratings to become as embedded in corporate and financing decisions as traditional credit ratings? If so, what could this mean in practice for companies that fail to build reliable ESG data and risk management into their strategy?
Yes, ESG ratings will become increasingly embedded in business and financing decisions, alongside—not instead of—traditional credit ratings. Private internal scores outside the authorisation perimeter may still be legally possible, but they are likely to be less effective for regulated financial institutions: they cannot automatically offer the same assurance of independence, transparency, conflict management, supervisory accountability and repeatable quality as a provider organised under the EU framework. Banks may therefore need extra validation and controls before relying on them. CSR combines a single methodology with certified processes, defined service levels and industrial capacity; it has already produced more than 500 monographic ESG assessments since the beginning of 2026. In practice, regulation will favour providers capable of delivering robust, traceable and scalable outputs.
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