The Center for International Environmental Law thinks that Credit Agencies are miscalculating the risk of climate change – that climate change might be the cause of the next financial crisis.
According to the CIEL report;
Anthropogenic climate change associated with 4°C or greater warming (a “≥4°C climate scenario”) has disastrous impacts on the environment, people, and the global economy. However, this ≥4°C climate scenario is based on a business-as-usual climate change trajectory that may not continue. There is a growing trend in international, national, business, consumer, legal, regulatory, and social efforts to mitigate climate change. For instance, 193 nations have agreed to limit global warming below 2°C (a “2°C climate scenario”). Despite the movement away from business-as-usual, credit rating methodologies are not factoring in a dynamic climate change trajectory. Instead, they appear to assume a ≥4°C climate scenario. Assuming a ≥4°C climate scenario artificially inflates the credit ratings and financial value of companies causing global warming and could expose rating agencies themselves to legal liability.
In my opinion, if there is a business sector which can make just about anything else look good, its green investments. Along with well known Federal backed disasters like Solyndra, the history of alternative energy investment is littered with many lesser known green failures, such as ECOtality, Abound Solar, Fisker Automotive, the list goes on (source Breitbart ).
The green sector is so unattractive, the British government had to set up their own investment bank, to lend money to people whose businesses are then supported by generous government handouts.
When the government finally runs out of money, as recently happened in Spain, everything falls in a heap – only the lawyers end up getting rich.
Given Europe and America’s continued insane infatuation with green policies at any cost, given the track record of failure and ruin, in my opinion pouring people’s pensions into green follies is far more likely to trigger a financial crisis, than investing in fossil fuel businesses.
Credit Agencies, unlike politicians, can be sued if they offer poor advice, so generally they try to stick to offering good advice. Which is awfully inconvenient for greens looking for capital. A substantial amount of the world’s wealth is invested with funds which substantially base their investment decisions on the advice of credit agencies.