Cities and states float municipal bonds to get the money to finance their operations and fund capital improvements, but that’s going to get a bit trickier for jurisdictions on the edge of climate change impacts.

According to these reports, investors and bond rating agencies are starting to insist that local and state governments start disclosing details of their preparations for climate change so that investment risks can be identified and considered.

Moody’s Investors Service, a bond rating agency, recently became the majority owner of a climate change research company, and the agency now intends to use the research to determine how much different bond issuers are doing to address the impacts of the changing climate. And those findings will start to be considered in Moody’s ratings. See “Moody’s to Weigh City Efforts to Cope with Climate Change in Bond Ratings.”

Similarly, Governing.com reported: “Climate Change Could Make Borrowing Costlier for States and Cities.”

as ratings firms begin to focus on climate change, and investors increasingly talk about the issue, those involved in the market say now is the time for communities to make serious investments in climate resilience — or risk being punished by the financial sector in the future.

“We look not just at the vulnerability of state and local governments, but their ability to manage the impact,” said Emily Raimes, vice president with Moody’s Public Finance Group. “While we’ll be looking at the data on rising sea levels and who may be more vulnerable, we’ll also be looking at what these governments are doing to mitigate the impact.”

See also:

“Moral Money: California wildfires show immediacy of climate crisis,” Financial Times, Oct. 30, 2019.

“Muni Bonds Face Climate Change. And Investors Are Ignoring the Risks,” Barron’s, Sept 20, 2019.”

“Climate change calamity and municipal disclosure,” Bond Buyer, May 23, 2019.

“Climate Risks, Opportunities, to Be Major Markets Factor in 2020,” NY Times, Nov 6, 2019.