Read our latest insights and analysis on the key trends in climate globally
The COP 27 climate summit focused on the implementation of existing commitments and mobilizing climate finance for emerging markets.
New sources of concentration risk in loan portfolios stem from the exposure of counterparties and their facilities to climate hazard events, and our novel framework helps to quantify these risks.
Municipalities are increasing their CRE emissions regulations, leading to potential financial strains on owners and posing CMBS cash flow risk.
This white paper quantifies U.S. environmental, macroeconomic, and federal fiscal impacts under four scenarios that assume different climate-related interventions
Limited climate adaptation and carbon transition planning to date, financing gaps and institutional challenges will constrain investment needed to offset the risks posed by climate change.
Much work remains for banks to reduce financed emissions and align portfolios with pathways to a net zero economy, but the transition has potential credit implications for banks.
Mitigation investments by Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric have improved their ability to withstand the financial impact of wildfires.
China faces “highly negative” exposure to water management risk with population growth, rapid urbanization, industrialization, and climate change all exerting pressure on water resources.
Increasingly severe weather and ongoing emission-reduction goals are driving up utilities' use of UCRC ABS, supporting the companies' finances and mitigating financial shocks for customers.
The prevalence and ambition of decarbonization targets are lowest among companies most exposed to transition risk. Given increasing market and regulatory pressures, a lack of clarity on plans is likely to lead to rising credit risk for those most exposed. Comparing plans is difficult because the granularity of disclosures varies widely.
New analysis shows a strong quantitative relationship between government credit ratings and metrics, and environmental, social and governance considerations.
Capital expenditures at US regulated utilities are increasing substantially, much of it to address carbon transition and physical climate risks. Elevated capital spending may pressure credit quality, as high interest rates and commodity prices increase social risks related to customer affordability.
Growing low-carbon operations is vital to the future of BP p.l.c. (A2 stable), Shell Plc (Aa2 stable) and TotalEnergies SE (A1 stable). But if diversification weakens profitability and cash flow, or entails significant debt financing, the credit implications could be negative.
The U.S., the EU and other large economies are advancing carbon transition policies. Still, announced global pledges by governments fall short of what is necessary to reach net-zero goals by 2050.
Moody’s newly updated heat map of environmental risk, with rated debt levels as of June 2022, shows an overall increase in credit risk linked to environmental considerations.
The difficulties many emerging market sovereigns face in mobilizing capital for climate-related initiatives, together with unsustainable debt dynamics in some cases, have again increased attention on debt-for-climate/nature swaps. In this FAQ, we describe these swaps and explain their credit impact.
Why is flood insurance take-up declining in the region?
Given the financial constraints faced by the sovereigns and regional and local governments most vulnerable to physical climate risk, strong governance will be a key differentiating factor of governments' climate resilience.
Governments that do not address the socioeconomic effects of a transition to a low-carbon economy face risks that can weaken their credit quality. Those that manage it well can benefit.
The onshore wind and solar power sectors in China have entered grid parity for new projects going forward, which is credit-positive for the sectors because it means they are becoming more commercially viable and competitive against other fuel sources.
2022 has seen hailstorm records being broken in France, from the number of storms to hailstone size, and with it has come record-breaking hail losses. How unlikely were these losses? And are they due to climate change?
Investing in domestic hydrogen production will help GCC economies diversify, but continued hydrocarbon reliance leaves them vulnerable to an accelerated global decarbonisation agenda.
Peer comparison: Hard-to-decarbonise cement makers take different paths towards net zero
Ten Years after Superstorm Sandy, a look into the short- and long-term impacts of the storm on the commercial real estate market.
Carbon-intensive sectors are eager to adopt hydrogen into their production cycles to meet increasingly tightening emission standards. But the lack of available renewable energy and hydrogen, low technological readiness and high production, distribution and storage costs are likely to severely limit large-scale production and commercialization of green hydrogen, especially without continued government support.
ASEAN's growth dynamics and fossil fuel intensity increase carbon transition hurdles, although regional efforts on green finance will reduce capital constraints over time.
Latin America and the Caribbean face multiple, increasingly frequent risks from a changing climate.
Physical climate risk has a range of credit implications for global markets, according to a this report from Moody’s Investor Service.
Moody’s Investors Service
Are Emerging Market Entities Prepared to Manage the Social Implications of Global Decarbonization?
Moody’s held its just transition webinar on November 22
Emerging markets with stronger governance, diversified economies best placed to achieve socially “just transition”
Eighteen percent of credit ratings would be higher but for ESG exposures, with more reflecting some negative ESG credit impact.view INFOGRAPHIC
Governance, business profile and time horizon can mitigate risks for some corporates highly exposed to carbon transition and physical climate risksview INFOGRAPHIC
Southern and Central Eastern Europe regional and local governments (RLGs) face high exposures, mainly from the compound effects of water and heat stress. Rated RLGs, mainly in Western Europe, have low sensitivity to physical climate risks and are implementing specific actions to boost their resilienceview INFOGRAPHIC
Higher prices and strong capital counter negative effects over next 12-18 monthsview INFOGRAPHIC
Environmental risks include emissions standards and climate exposure that pose asset value risk to transactions' underlying collateral. For social risk, consumer preference and regulatory scrutiny are key issues. Governance risk encompasses compliance with and interpretation of transaction documents.view INFOGRAPHIC