MSCI ESG Research has downgraded Russia's ESG Government Rating from B to CCC (the lowest rating possible) with immediate effect.

The news came following the country's downgrade from BBB to B on 28 February, when it warned that further downgrades were possible.

A spokesperson for MSCI said that since the previous downgrade last week, "we have observed further heightening of Russia's ‘Economic Environment' and ‘Financial Governance' risks based on the widening domestic impact of international sanctions and financial isolation on Russia's economy".

They explained that these include sanctions on Russian individuals, companies and central bank, the barring of SWIFT usage for Russian banks and the withdrawal of major international companies from the country.

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They added: "We consider that some of the historic quantitative data used in our methodology are no longer accurate indicators for the level of risk faced by Russia on these key ESG issues, which has created a higher degree of uncertainty, and therefore risk, for these metrics."

Therefore, the firm has downgraded Russia's ‘Economic Environment' and ‘Financial Governance' scores to zero, where the country's ‘Political Governance' score also stands. The remaining ‘Natural Resources', ‘Environmental Externalities and Vulnerabilities' and ‘Human Capital' categories remain unchanged.

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MSCI ESG Research has also added Sovereign Watch assessments to the firm's Ukraine ESG Government Rating, however this has not resulted in a change in rating from BB.

The Sovereign Watch assessments for Ukraine include ‘Very Severe' assessments under the ‘Political Governance' Risk Exposure and Risk Management categories and ‘Very Severe' assessments under the ‘Human Capital' and ‘Economic Environment' Risk Exposure categories.

The spokesperson added that these "assessments will remain under active monitoring".