The Center for International Environmental Law thinks that Credit Agencies are miscalculating the risk of climate change – that climate change might be the cause of the next financial crisis.
According to the CIEL report;
Anthropogenic climate change associated with 4°C or greater warming (a “≥4°C climate scenario”) has disastrous impacts on the environment, people, and the global economy. However, this ≥4°C climate scenario is based on a business-as-usual climate change trajectory that may not continue. There is a growing trend in international, national, business, consumer, legal, regulatory, and social efforts to mitigate climate change. For instance, 193 nations have agreed to limit global warming below 2°C (a “2°C climate scenario”). Despite the movement away from business-as-usual, credit rating methodologies are not factoring in a dynamic climate change trajectory. Instead, they appear to assume a ≥4°C climate scenario. Assuming a ≥4°C climate scenario artificially inflates the credit ratings and financial…
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