A November report from Moody’s Investor Services described its analysts’ consideration of climate risks in light of how states and municipalities in the U.S. prepare for climate events. The report, “Environmental risk: Evaluating the impact of climate change on U.S. state and local issuers,” listed six indicators Moody’s uses to assess exposure and susceptibility to both extreme weather events and longer-term effects of climactic shift.
In announcing the report, Moody’s said climate change will likely increase exposure to economic loss for states and localities. Moody’s analysts for municipal issuers with higher susceptibility to climate risks “will also focus on current and future mitigation steps and how these steps will impact the issuer’s overall profile when assigning ratings,” the announcement said.
In an October report, “Understanding Climate Change Risk and U.S. Municipal Ratings,” Standard and Poors answered questions about how its analysis of climate change risks interacts with its existing U.S. public finance criteria and rating definitions. S&P said “it is important to consider the current long-term credit implications of the physical impact of climate change that municipal debt issuers must contend with.” Since its ratings are forward-looking opinions about overall creditworthiness and focus on capacity to meet financial commitments as they come due, S&P said it might revise its opinion as it assesses “how an entity’s credit strengths and exposures change in response to current and emerging risks.”
___
The Moody’s report is available only to subscribers, but the S&P article is at http://bit.ly/2DD2d0W.