Climate change and credit ratings

A team of economists at the Cambridge Judge Business School have warned that the first “climate smart” sovereign credit ratings suggest global warming ratings downgrades as early as 2030.

The economists are used artificial intelligence to simulate the effects of climate change on S&P Global Ratings credit ratings for 108 countries.

They assessed this over the next 10, 30 and 50 years, and by the end of the century.

“The majority of countries in our sample will suffer downgrades by 2030 if the current trajectory of carbon emissions is maintained. Virtually all countries, whether rich or poor, hot or cold, will be downgraded by 2100,” said co-author Dr Kamiar Mohaddes.

“Keeping to the Paris Agreement will be tough, but our estimates strongly suggest that stringent climate policy will significantly reduce the impact on ratings.” —