Main ESG Risks. Unlike in the equity analysis scenarios that consider a wide range of risks and opportunities that affect issuers, the focus of credit analysis is on the issuer's ability to service its debt. Naturally, this covers both the ability to pay regular interest payments, or coupons in the case of bonds, as well as the repayment of the principal amount. This is important, because whereas ESG factors may present both risks and opportunities for an issuer, credit analysis focuses is more on the downside risk rather than opportunities. It is the downside risks that may impact company financial performance and its ability to generate cash flows that can satisfy the debt obligations. Upside opportunities may have significant positive impact on the company's financial performance, but most of the benefits accrue to equity holders, not holders of fixed income instruments, because the best outcome for bond holders is to receive full and timely payment of interest and repayment of the principle when it falls due. Looking across ESG risks, governance risks have historically been the most prominent. For example, fraud prevention has been seen as crucial for addressing downside risk. The governance, or "G" factors, that have featured so prominently among credit investors, include governance structure and group structure, financial transparency, management strategy and management of environmental and social risks, and ESG reporting and compliance or non-compliance with codes and frameworks. The environmental, or "E" factors, include physical and transition risks resulting from climate change, greenhouse gas emissions and air quality, energy management, water and wastewater management, waste and hazard material management of ecological impacts, and exposure to environmental impacts. The social, or "S" factors include human rights, working conditions, community relations access and affordability, customer welfare, fair messaging, privacy and data security, labor relations and practices for employee wellbeing, and exposure to social impacts. The investment community has recognized that the ESG drivers impact on financial performance, asset values, legal costs and compliance costs, and those in turn impact on credit risk of the issuer.