With climate change and severe weather events garnering rising numbers of headlines, lenders and institutional investors are increasingly interested in how S&P Global Ratings incorporates the risks and opportunities associated with environmental and climate (E&C) factors into its corporate credit ratings, and the impact these factors have had on our ratings. We've recently finished our second two-year review of E&C factors, which looks at how they affected corporate ratings between July 16, 2015, and Aug. 29. 2017. For that period, we've found 717 cases where E&C concerns were relevant to the rating, and 106 cases where E&C factors--both event-driven and those occurring over a longer time horizon--resulted in a change of rating, outlook, or a CreditWatch action. As in our previous review of E&C factors, the lion's share of affected ratings were in the oil refining and marketing industry, among regulated utilities, and in the unregulated power and gas subsector.

We then took definitions of climate-related risk and opportunity set out by the Financial Stability Board's Task Force on Climate-related Financial Disclosures (TCFD) in June 2017 and looked at how the 106 cases where E&C risks and opportunities have had a material impact on credit quality fit into the TCFD's definitions. We provide examples of this mapping exercise to provide further insight into our review.