Top Polluters Have More Credit Risk – and Are Mainly State-Owned

Environmental awareness is having a significant effect on the way we consume and invest. Plans to phase out petrol-driven cars, outlawing of gas boilers, massive investment in alternative energy sources, elimination of peat-based compost; these are just a few of a rapidly growing list of measures intended to halt and even reverse the impact of human activity on the environment.

While climate change remains a controversial and partisan topic, the private sector cannot ignore it in the face of vocal public opinion and a strong trend towards ESG-driven investment. Investible companies need to be able to show a credible plan for reductions in CO2 emissions to meet internationally agreed targets.

Twenty organisations – all in the resource extraction industry – have been responsible for a third of all CO2 emissions over the past 50 years. Consensus credit ratings are available for 19 of these¹, and 16 of these provide credible projections for their intended CO2 emissions for the next ten years. Nine of these are majority state-owned.
Figures 1 shows the average projected CO2 emissions in billions of tons per billion dollars of revenue, for Private and State-owned firms. Figure 2 shows the average consensus credit rating on a 21-category scale (1=aaa), also split into Private and State-owned firms [please continue below to access full report].

Figure 1: Average Projected Emissions

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^{1 No consensus is available for the National Iranian Oil Company due to international sanctions.}

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