Credit risk appraiser Moody’s buys a firm that assesses climate change risk

Even for those not very familiar with Moody’s, this headline speaks volumes about the impact of the risk of climate change on our country and planet. In a July 24, 2019 article in The New York Times by Christopher Flavelle called “Moody’s Buys Climate Data Firm, Signaling New Scrutiny of Climate Risks,” the company that measures credit risks for bond investors in companies, cities, counties, states and countries, has added to its expertise. Per Flavelle’s article

“Moody’s Corporation has purchased a controlling stake in a firm that measures the physical risks of climate change, the latest indication that global warming can threaten the creditworthiness of governments and companies around the world.

The rating agency bought a majority share in Four Twenty Seven, a California-based company that measures a range of hazards, including extreme rainfall, hurricanes, heat stress and sea level rise, and tracks their impact on 2,000 companies and 196 countries. In the US, the data covers 761 cities and more than 3,000 counties.

‘We are taking these risks very seriously,’ said Myriam Durand, global head of assessments at Moody’s Investor Service, who said the purchase would allow its credit analysts to be more precise in their review of climate-related risks. ‘You can’t mitigate what you don’t understand.’

Sudden shocks such as floods, wildfires, or storms can hurt businesses and send residents fleeing, taking away the tax revenue that government s use to pay debts. And, longer term threats – such as rising seas or higher temperatures – can make those places less desirable to live in, hurting property values and, in turn, the amount raised by taxes.”

To illustrate this risk, the same day I read a reprint of this article in The Charlotte Observer, the local paper ran a story on the town of Fair Bluff, NC which has been flooded twice in that past four years due to Hurricanes Matthew and Florence which lingered over their area. Sitting near the Lumber River, the citizens of Fair Bluff saw the river rise well beyond flood range. The previous flood of this magnitude occurred 90 years before. Sadly, the population and business is declining due to rebuilding costs. As a result, so is the tax revenue to provide services.

There is a huge financial impact of climate change on the lives and business of people and communities. Rebuilding a town that may continue to be in harms way adds to the risk and some people are choosing to relocate. And, It is not just small towns. Houston has had two major floods over the past five years, as well. Houston has felt on a larger scale what Fair Bluff has felt. Not only do the rains of the Hurricane sit over them, the rivers upstate overfill and flow toward the sea. This causes extra flooding.

So, Moody’s is improving their ability to assess repayment risk to bondholders. A city that has rebuilt or prepared poorly is at greater risk of flight of people, businesses and tax dollars. What should also be alarming to American citizens is while Moody’s is taking forward thinking action, the US government is stripping climate change reports from their websites and demoting, transferring or running off Ph.Ds who are expert in measuring and addressing climate change. In short, we are throwing away a technical advantage that could help the US and the world.

Repeating what Ms. Durand said above, “You can’t mitigate what you don’t understand.”  So, please ask all politicians what they plan to do about climate change including the US president. And, a question for those who still buy the hoax stuff, why is Moody’s spending all of that money on a hoax?

 

6 thoughts on “Credit risk appraiser Moody’s buys a firm that assesses climate change risk

  1. Yeah. The insurance companies — and the military — have acknowledged the fact of climate change for years now as insurance rates have climbed and the military take steps to defend themselves against future natural calamities.

    • Hugh, very true. I like these matter-of-fact stories which say you can believe what you want, but we are moving ahead. It is hard to select the worst result of the Trump presidency, but my biggest fear going in his damage to moving forward on climate change. But, as we saw with Dan Coats, disagreeing with the impudent president makes your job even more temporary. Keith

  2. It is also a matter of religion and belief. There are some religions that believe that no matter what we do to this planet God will snap his fingers and make it all better. So really why should they do anything?

    I believe we should be doing all we can to minimize our own impact and to cut down global warming.

    • Roseylinn, that may be what too many feel about religion, but I have written before about two separate religious panel dicussions, one headed by the local Sierra Club and the other by an Interfaith group. The panels included rabbis, priests, imams and ministers or deacons.

      Each said their scriptures support the higher being giving man dominion over the environment, but as a caretaker. And, of course the Pope did his treatise on climate change. So, we need to push back on people. As I like to add, God have us a brain, so we need to use it. Often, the miracle we pray for is in the head, hands and heart of a surgeon or physicist. Keith

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