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US cities taking proactive steps to mitigate credit risk from climate change

Publication Date: 01 Feb 2019 - By ReachX Team By ReachX Team
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More and more US cities are taking credit positive steps to address long-term risks caused by climate change, according to a recently published survey. 

A new study conducted by Moody's, based on feedback from 28 of the 50 largest US cities the agency rates by debt outstanding, found that 82% of those surveyed report they will have a climate risk action plan in place by the end of 2019.

"Cities are increasingly adopting plans that detail specific projects designed to strengthen infrastructure and minimize economic disruption from natural disasters and long-term climate change," said Michael Wertz, a Moody's vice president. 

"We view this increasing focus on climate risks as a credit positive, particularly as climate change is forecast to increase the frequency and severity of extreme weather events."

Roughly 60% of the cities' reported climate mitigation or adaptation projects are aimed at managing flood risks. The figure increases to 83% when including projects intended for mitigating multiple climate risks, including flooding. Drought, storms, and heat account for a combined 17% of climate mitigation projects.

Efforts to mitigate climate change risks carry a substantial cost relative to outstanding debt, but cities anticipate sharing this burden with federal and state governments. Nearly 54% of respondents plan to issue debt to fund climate initiatives, and climate-driven bond issuance will be driven by the availability of additional funding sources, including federal and state aid.

 

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