Moody’s has called on countries to accelerate work towards ratifying the Paris climate deal, as it will lower the risks of a damaging transition from fossil fuels.
On Tuesday, the leading credit rating agency said it will now use the raft of commitments delivered by nearly 190 governments last December’s UN pact to guide future credit assessments.
“The near universal adoption of the Paris Agreement substantially increases the likelihood of coordinated and effective policies to materially reduce carbon,” said Brian Cahill, Moody’s Investor Services managing director.
This in turn has “the potential to become a significant ratings driver in a broad set of industries,” he added.
Moody’s said it would now use four measures to assess the infrastructure and corporate sectors in light of the UN pact to limit global warming to well below 2C.
1) Policy and regulatory uncertainty regarding emissions policies
2) Declining profitability and cash flows due capital expenditure and operating costs
3) Demand substitution and changes in consumer preferences
4) Technology developments that accelerate the adoption of low-carbon technologies.
Credit impacts in the coal, coal infrastructure and unregulated power utilities are already being felt, it added in a statement.