Published on 28 November 2018


Environmental risks pose short-term threats for oil, chemical and transportation sectors

Moody’s evaluated 84 sectors’ exposure to environmental risks. Those most under threat include construction, steel, chemical, automotive and logistics sectors. According to the rating agency, environmental factors could diminish the credit quality of the sectors concerned in the next three to five years.

Nine of the sectors threatened by environmental risks represent $1.7 billion in debt.

Climate change does not only impact rising sea levels or biodiversity, it will soon impact the economy.  Environmental factors such as air, water and soil pollution, CO² regulations, water restrictions and natural disasters pose a “material risk” for 11 economic sectors, according to Moody’s most recent Global Heat map report.

The rating agency screened 84 sectors, warning that 9 out of 11 new sectors will see this risk materialise in the immediate future, or in the next three to five years. The sectors and activities concerned include automotive manufacturers, activity involving building materials and chemically based products, mineral exploitation, oil and petroleum exploration and refining, as well as steel production, transportation and logistics.

$1.7 billion in debt

In total, these nine sectors represent $1.7 billion in debt. Their environmental risk exposure could significantly impact their credit rating. For the other sectors, which include the mining and processing of carbon, as well as public services and non-regulated electronic companies, credit pressure is not new and has existed for years.

This continues to call into question the economic model of non-regulated utility companies and electricity suppliers that are directly exposed to political pressure in favour of carbon emissions reduction, and puts pressure on the margins of mature markets”, stressed Rahul Gosh, Senior Analyst for Moody’s Green Bond Assessments team.

22 other actors, representing a debt of more than $10 billion, have credit profiles moderately exposed to environmental risks.

Concepcion Alvarez @conce1

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