News

Poor credit ratings imperil climate action

Factory greenhouse gasBecause of their limited ability to access financial markets, developing countries are struggling to cut greenhouse gas emissions, says a ratings agency. Of the 170 countries that ratified the Paris Agreement, 60 have disclosed a financial plan to meet their responsibilities, according to research by S&P Global Ratings. Together, these 60 countries expect the cost to be $5.3 trillion. “One of the key challenges facing countries that are most exposed to the physical impacts of climate change – typically emerging and developing economies – is their limited access to financial markets, which is partly due to their lower creditworthiness,” said the agency. Many countries hope the private sector will meet the cost of adapting to a low-carbon economy. However, S&P Global Ratings says many areas have received too little private investment, such as energy efficiency or building resilience. “Recent extreme weather events have shown just how vulnerable these countries are, particularly if the frequency and intensity of these events increases through climate change, and the severity of the impact. For example, Hurricane Harvey is expected to cost the US around 1% of its GDP, whereas the damage caused by Hurricane Irma is likely to cost some Caribbean Islands more than their annual GDP, according to reports.” ©2017 funds global asia

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