Social issues such as demographics, labor force, income and education drive key aspects of credit quality for national, regional and local governments: economic strength, governmental stability and financial flexibility. The impact of environmental, social and governance (ESG) components can change over time and most often involve credit risk but can also convey credit strength.

Our heat map assesses the environmental risk exposure of 84 sectors globally, with $74.6 trillion in rated debt. We find that 11 sectors with $2.2 trillion in rated debt have elevated credit exposure. For these sectors, environmental risks are either already material to credit quality or could be over the next three to five years.

In the latest installment of our podcast series on environmental issues, Rahul Ghosh from our EMEA green bond team and Jane Soldera from our EMEA covered bonds discuss our first green bond assessment for a covered bond; what it means to have a green bond assessment for a covered bond; and how Europe's covered bond market is getting greener.

Green bond issuance in the first three quarters of 2018 was roughly in line with the same period of 2017 when issuers brought $110.1 billion of green bonds to market. At this rate, the market remains below the pace needed to achieve our revised full-year forecast of $175-200 billion.