Climate risks could downgrade 20% of firms: Fitch Ratings
Fitch expects uneven impacts across sectors amidst transition to low-carbon economy.
Twenty per cent (20%) of rated corporate issuers could face downgrade risks by 2035 due to increasing climate-related risks, a 2 percentage point increase from previous estimates, said Fitch Ratings.
The adjustments only affect certain sectors, with protein production in developed markets (DM) facing the sharpest rise despite a few affected rated issuers.
The airline sector saw a modest upward revision in its vulnerability risk assessment, but it had the highest number of issuers amongst sectors affected by the update, which reached an 'Elevated' Climate.VS (at 45 and above) by 2035.
The agency noted that issuers in more vulnerable sectors without mitigation efforts will face greater rating pressure from long-term climate risks.
Fitch anticipates uneven impacts across sectors during the transition to a low-carbon economy. Coal-based utilities, oil and gas, and certain metals and mining sub-sectors are expected to be particularly vulnerable due to high emissions and lower demand forecasts.
In contrast, sectors such as technology, media, telecom, and waste recycling are expected to be less susceptible to transition risks. Some sectors, including renewables, are likely to benefit from the energy transition.
