Climate-blind borrowing risks 'credit crunch' for future generations

(Reuters, 7 Apr 2021) As coronavirus borrowing grows, few countries are reporting whether climate risks will limit their ability to repay debt.

As countries step up borrowing to fund COVID-19 stimulus spending, few governments are paying attention to how climate change could limit their ability to repay the debts, researchers warned on Wednesday.

Increasingly severe climate shocks, such as hurricanes, and chronic pressures such as water shortages and drought are already hurting economies, and could worsen in the future, scientists say.

But researchers at Oxford University, who estimated national governments issued 193 long-term bonds worth $783 billion in 2020, reviewed investor prospectuses for 50 and found about three-quarters did not disclose any climate-related risks.

The findings suggest "governments do not understand the economic impacts of climate risks or are unwilling to report them", they said in a commentary published in the journal Nature.

"Without rigorous climate disclosures, investors and governments are flying blind," they added.

Of the 26 countries assessed, only three - Bermuda, the Dominican Republic and El Salvador - acknowledged that increasingly frequent weather disasters would create risks for their economies.

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Reuters, 7 Apr 2021: Climate-blind borrowing risks 'credit crunch' for future generations