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The growing risk of inland and coastal flooding will weigh on the credit quality of major cities unless they take adaptive actions. These cities will need significant investments to reduce the risk of severe flooding, which can cause catastrophic property damage, erode vital infrastructure and disrupt economic activity. But the credit effect of leverage-funded adaptation would be offset by greater long-term resilience to flooding.
Our summary of the latest regulatory state of play across key jurisdictions for 2022 and beyond.
Immediate action is needed to limit global warming to the target set in the Paris Agreement, according to the United Nations’ Intergovernmental Panel on Climate Change (IPCC). Accelerated climate action would have credit-negative effects on carbon-intensive industries and sovereigns in the short term. But the IPCC projects that such measures will reduce long-term economic costs and many of the risks tied to global warming.
The transition to a low-carbon economy will affect businesses and in turn their investors, in multifaceted ways both positive and negative. Multidimensional datasets capturing forward-looking low-carbon metrics provide a range of tools to inform nuanced portfolio strategy, engagement and risk management.
The requirement to decarbonise the EU's building stock by 2050 is credit positive for the building materials sector because it will make revenue more predictable and mitigate cyclicality. The extent of the benefit to companies will depend on how successful EU member states are in stimulating private-sector funding.
The US Securities and Exchange Commission’s proposal to expand and standardize the climate-related disclosures of publicly traded companies will potentially make such disclosures more useful and reliable for investors. But consistency and comparability across companies will likely remain a near-term hurdle.
Mexico has effectively cut back its goals for reducing greenhouse gas emissions, keeping its targets unchanged since 2016 while business-as-usual policies imply more emissions than originally estimated. The electricity reform measure would effectively delay implementation of carbon-transition measures, intensifying future credit stress for Mexican issuers.
Chinese sales of battery electric vehicles, plug-in hybrid electric vehicles and fuel-cell electric vehicles – collectively known as “new energy vehicles” (NEVs) -- surged 157% in 2021 from the prior year, lifting their share of total auto unit sales to 13.4% from 5.4% in 2020. China appears on track to achieve its goal of increasing NEV sales to 20% of the country’s total auto sales by 2025.
The impacts of Russia’s invasion of Ukraine and the scale of mounting international economic sanctions are set to reconfigure the existing ESG risk landscape for global business and financial markets. This comment discusses Russia’s sovereign ESG performance from Moody’s ESG Solutions’ perspective and the impacts of the current military crisis.
The latest IPCC report outlines the exposure of human and natural systems to worsening climate impacts. We assess its implications for leveraging climate data to build resilience, underscoring the urgent need for scaling up adaptation investment.
Credit implications of net-zero pledges will vary across Asia, driven by domestic policies and funding pressures. Volatile raw material prices and supply chain vulnerabilities will test the credit quality of battery makers, while carbon tariffs imposed in export markets will have a greater credit impact than domestic carbon pricing. Sectors exposed to natural capital risks will face greater investor scrutiny.
Our 2022 report looks at why narrowing gender gaps is an economic, business and financial imperative. The report features insights from analysts across Moody's Investors Service, Moody's Analytics and Moody's ESG solutions.