Wall Street’s $22 Trillion Carbon Time Bomb
It’s not just the moral imperative of dumping fossil-fuel producers anymore. Now it’s a matter of financial health.
According to Moody’s, financial institutions in the Group of 20 leading industrial and developing nations have $22tn of exposure to carbon-intensive industries. That’s equal to about 20% of their total loans and investments. So unless these firms make a swift shift to climate-friendly financing, they risk reporting losses, Moody’s said.
For banks, having a high credit rating is paramount because they rely on low funding costs to make loans at higher interest rates and profit from the net interest spread. Additionally, almost no one will want to have their money deposited at a risky financial institution.