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How S&P Credit Ratings Change by Environmental & Climate Factors

S&P Global’s corporate credit ratings – the organization’s predictions about a company’s capacity and willingness to meet its financial commitments as they come due – were affected by environment and climate (E&C) factors for more than 700 companies. Between the summers of 2015 and 2017, E&C concerns were relevant to the rating in 717 cases – and in 106 cases, E&C factors actually resulted in a change of rating, outlook or a CreditWatch action, S&P Global says.

The lion’s share of affected ratings were in the oil refining and marketing industry, among regulated utilities, and in the unregulated power and gas subsector. These are the industries where environmental regulations and weather events tend to have a more direct impact on credit quality than in other sectors, though S&P Global says that E&C risks factor into its criteria for most industries to some degree.

Other industries whose ratings were affected by E&C factors include leisure and sports, commodity chemicals, branded nondurables, among others.

As climate change continues, the organization says it could potentially generate more E&C risks germane to its analyses.

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