Climate change affects sovereign rating, S&P says

Climate change and ageing global population are  “ global megatrends”  impacting sovereign creditworthiness, in most cases negatively, according to a report released  on Thursday (May, 15) ratings agency Standard & Poor’s.

Most sovereigns will feel the negative effects of climate change to some degree and through various channels, including economic growth, external performance, and public finances, the report said, but the poorest and lowest rated sovereigns are expected to be hit hardest,  due to their reliance on agricultural production and employment, which can be vulnerable to shifting climate patterns and extreme weather events, and to their weaker capacity to absorb the financial cost.

S&P defined climate change as a “global, collective action problem”, as “individual societies cannot by themselves meaningfully reduce the impact they will feel as the climate changes”.