Credit Rating Agencies are Miscalculating Risks of Climate Change, Report Finds
A new report argues that credit agencies’ failure to properly account for climate risks could lead to the next global financial crisis
Originally posted on The Guardian.
Credit rating agencies still have a long way to go in incorporating climate change risks into their analyses, said Lenora Suki, head of sustainable finance product strategy at Bloomberg. “In general, they have yet to thoroughly and transparently integrate these emerging issues and concerns into traditional credit models,” she said.
Issues related to climate change, such as the current shift away from coal in the US, are already affecting debt issuers, and will continue to do so in the coming years, she added.
“Rating agencies are facing pressures and will need to get better fast at being thorough and transparent about not just integrating factors related to climate change and other [environmental, social and governance] issues but also explaining to market participants how consideration of those factors influences their rating decisions,” Suki said.
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