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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    Credit Benchmark brings together internal credit risk views from over 40 leading global financial institutions. The contributions are anonymized, aggregated, and published in the form of consensus ratings and aggregate analytics to provide an independent, real-world perspective of credit risk. Risk and investment professionals at banks, insurance companies, asset managers and other financial firms use the data for insights into the unrated, monitoring and alerting within their portfolios, benchmarking, assessing and analyzing trends, and fulfilling regulatory requirements and capital.