Creditworthy: do climate change risks matter for sovereign credit ratings?
File(s)
Accepted version
Author(s)
Cappiello, Lorenzo
Ferrucci, Gianluigi
Maddaloni, Angela
Veggente, Veronica
Type
Journal Article
Abstract
Climate-related risks are increasingly recognised as a threat to long-term fiscal sustainability. This paper studies to what extent credit rating agencies integrate these risks into their sovereign rating assessments. It finds that climate risks have been integrated in ratings since the 2015 Paris Agreement, but their impacts remain limited. Countries with high debt and fossil fuel dependence received lower ratings post-2015 while those benefiting from the green transition—through revenues from transition-critical materials—received higher ratings. These findings highlight the need for caution in using credit ratings for regulatory and macroeconomic policies, as these ratings appear to underestimate environmental factors.
Date Issued
2026-08-01
Date Acceptance
2026-06-09
Citation
Journal of International Money and Finance, 2026, 167
ISSN
0261-5606
Publisher
Elsevier
Journal / Book Title
Journal of International Money and Finance
Volume
167
Copyright Statement
Copyright © 2026 Elsevier Ltd. This is the author’s accepted manuscript made available under a CC-BY licence in accordance with Imperial’s Research Publications Open Access policy (www.imperial.ac.uk/oa-policy)
License URL
Publication Status
Published
Article Number
103628
Date Publish Online
2026-06-12