Moody’s: There is a debt of 4 trillion dollars due to environmental risks

The amount of debt most exposed to environmental risks has more than doubled in less than a decade to more than $4 trillion, according to a report by credit rating agency Moody’s.

In a report released yesterday, Moody’s explored the potential credit impact of environmental pressures such as climate change, waste and pollution on 90 sectors representing $82 trillion in debt. According to the report, those most at risk include oil and gas, mining and chemicals.

MANY SECTORS FACE GREAT RISKS

The report was published just days before the start of the COP28 climate change conference in Dubai, where politicians, diplomats, financiers and business leaders will meet to discuss how to address the devastating effects of global warming on the planet.

“Several global sectors will see their ability to service their debt potentially exposed to greater risks due to sea level rise, hurricanes, carbon emissions, pollution, threats to biodiversity and other environmental pressures,” Moody’s said.

HIGH RISK LOANS FROM THE OIL AND GAS SECTOR

While the corporate finance segment accounted for the majority of high-risk environmental debt, companies in the oil and gas sector covered approximately $1.7 trillion of the $4 trillion figure. Chemicals account for approximately $594 billion.

On the other hand, the report states that banks, which face low credit risk as a result of environmental factors, face increasing pressure from customers, investors and regulators to meet carbon conversion targets.