"Study reveals climate change as a downgrade risk for sovereigns"

A study conducted by the University of East Anglia and the University of Cambridge warns that failure to reduce carbon emissions globally will result in rising debt-servicing costs for 59 nations within the next decade. Under a "climate-adjusted" ratings system, countries such as China, India, the United States, and Canada could expect credit score downgrades by two notches. The study highlights that deferring green investments will increase borrowing costs for nations, leading to higher costs of corporate debt. The economic damage caused by climate change is already evident, with recent heatwaves estimated to have shaved off 0.6% points from global output this year. The study emphasizes that even though developing nations with lower credit scores will be hit hardest by the physical effects of climate change, nations with the highest credit scores are likely to face more severe downgrades due to the greater distance they have to fall.