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Laxman Pai, Opalesque Asia: Climate risks may lead to credit rating downgrades for one-fifth of global companies by 2035, said a new report.
According to the climate vulnerability scores (Climate.VS) released by Fitch Ratings, nearly 20% of global companies could see ratings downgrades by 2035 if they don't address their climate risks.
An elevated score could lead to a material risk of a negative rating action in or before the year to which the score relates, the report noted.
Only 2% of issuers have a Climate.VS at 45 or above in 2025, but this proportion increases to almost 20% of the publicly rated portfolio by 2035, or 315 issuers. Fitch is proposing additional analysis, consideration, and disclosure regarding the potential implications for the credit profile of climate-related transition risks for these issuers.
The proportion of issuers with Climate.VS above 45 increases from 2% in 2025 to almost 20% in 2035 and almost 30% in 2050, the report said.
The most prominent drivers of transition risks are the decline in oil use after 2025 or 2030, depending on the region, the decline in natural gas usage, the gradual phase-out of coal (although also with large variations across regions), a strong push for emissions reduction in heavy industry and buildings, and a rapid phase-out of internal combustion engine vehicles in key markets.
"The largest cohort of issuers above our threshold of 45 in 2035 is oil and gas producers, pipelines, and energy midstr...................... To view our full article Click here
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