Fitch Proposes Using Climate Vulnerability Scores in Corporate Credit Ratings Process

Credit ratings agency, Fitch Ratings, announced plans to use its Climate Vulnerability Scores, which examine sector exposure to low carbon transition risks, to enhance the process for identifying potential risks for its corporate credit ratings for non-financials. Fitch stated that it would not anticipate any issuers to experience rating changes, but expects the proposal to empower users to identify and react to the impacts of accelerating climate change policies.

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‍The potential effect of climate change on an issuer’s creditworthiness continues to pressure corporations, as low carbon transition risks, such as accelerated climate policies, disruptions in the market structure, and unexpected capital expenditure, could disrupt profitability.

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EU Lawmakers Approve Effective 2035 Ban on New Fossil Fuel Cars

This week, The European Parliament formally approved a law to effectively ban the sale of new petrol and diesel cars in the European Union from 2035, aiming to speed up the switch to electric vehicles and combat climate change.

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Banning the sale of new petrol and diesel cars could generate a reduction in carbon dioxide emissions. However, it will represent an increased demand for batteries for electric vehicles, which are often criticized. It will depend on the extent of emissions reductions in the mining and manufacturing industries and where cars are manufactured.

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‍Regulator Unveils New Rules For Advertising “Carbon Neutral” and “Net Zero” Claims

UK ad regulator the Advertising Standards Authority (ASA) announced the release of new guidance for advertisers making environmental sustainability claims to consumers, including the use of terms "carbon neutral" and "net zero." The ASA's new guidance seeks to help consumers avoid feeling misled and ensure that information explaining the basis of the claims is included. The guidance includes recommendations to avoid using unqualified claims in advertising and for marketers to include accurate information about the degree to which carbon emissions are being reduced or are basing claims on offsetting.

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‍Transparency and accountability on low carbon transition plans are vital to ensure brand credibility and would lead consumers to better understand what companies are doing to achieve their climate targets and consume more consciously.