ESG Industry Report Card: U.S. And Canadian Banks

Environmental, social, and governance (ESG) risks and opportunities can affect an entity's capacity to meet its financial commitments in many ways. S&P Global Ratings incorporates these considerations into its ratings methodology and analytics, which enables analysts to factor in short-, medium-, and long-term impacts--both qualitative and quantitative--to multiple steps of their credit analysis. Strong ESG credentials do not necessarily indicate strong creditworthiness (see "The Role Of Environmental, Social, And Governance Credit Factors In Our Ratings Analysis," published Sept. 12, 2019). We define ESG credit factors as ESG risks or opportunities that influence an obligor's capacity and willingness to meet its financial commitments. This influence may be reflected through a change in the size and relative stability of the obligor's current

... American Express Co. (###+/Stable/A-2) Pressman, Rian We believe ESG credit factors for American Express Co. (AmEx) are broadly in line with those of industry and U.S. peers. We view social and governance factors as most material to our credit analysis of retail-focused banks, like AmEx. AmEx is exposed to social factors through its significant credit card operations, which are some of the largest in the U.S. The company's consumer cards are largely targeted toward an affluent clientele that earns rewards or other benefits by transacting rather than borrowing, which we view positively. (It generates about 80% of its revenue via payment processing and fees rather than lending.) Moreover, AmEx's lending activities are targeted to consumers with high FICO scores, thus lessening compliance and reputational risks, in our view. We view governance at AmEx as largely consistent with better-performing U.S. banks. AmEx has historically had to manage...

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