To assess the impacts of yield changes on a company's cost of capital due to...

Credit rating agencies (such asMoody’s, S&P, and Fitch) assessESG risksby analyzing a company’sinterest coverage ratio(how well earnings cover interest expenses) andcapital structure(debt-equity mix). These metrics help determinecreditworthinessand the impact of ESG-related changes on borrowing costs.

For example, a company facing environmental fines or governance scandals may see itscredit spreads widen, increasing itscost of debt.