Climate Vulnerability Scores

A long-term outlook that assesses and measures the relative vulnerability of sectors and entities and their creditworthiness through a realistic stress scenario for ESG-related market developments

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Climate Vulnerability Scores:

Climate Vulnerability Scores assess the relative vulnerability of entities’ creditworthiness to a stress scenario incorporating reasonably foreseeable credit risks arising from ESG developments up to 2050. With a focus on the long-term outlook, we consider a realistic stress scenario for ESG-related market developments - specifically the likely policy actions required (with resultant market and credit consequences) for governments to meet their 2050 decarbonization targets.

The Climate Vulnerability Scores measure the relative vulnerability of sectors and entities to long-term ESG-related changes under a scenario that incorporates a global transition to a two degrees Celsius (2°C) warmer climate by 2050. Our analysis extends to 2050 but also provides milestone assessments from 2025. The higher the sector or entity score at a particular point in time, the greater the vulnerability under the scenario. A sector with a score of 90, for example, faces an existential threat from ESG before 2050, whereas one with a score of 10 will experience little disruption and may even see benefits. We provide scores in a time series to 2050 to compare the relative vulnerability of sectors and entities at different stages in the transition. Our core stress scenario is the UN Principles of Responsible Investment Inevitable Policy Response Forecasted Policy Scenario. We believe its focus on policy provides a realistic assessment of the core credit risk from ESG to corporate and project debt issuers.

Learn more and see how Climate Vulnerability Scores are just one component of the comprehensive Sustainable Fitch ESG suite. Only Fitch provides a one-stop-shop for the ESG financial community with tools, data, research and insights under one holistic, modular, user-friendly ESG investing umbrella.

Why Climate Vulnerability Scores?

Credit risk analysis based on a credible downside credit risk scenario whereby climate change is limited to 2 degrees of warming by 2050.

Vulnerability scores provide a time series comparative risk score of credit risk vulnerability for sectors, entities within a sector, and debt instruments.

Time-profiled scores at regular intervals from 2025 to 2050. Unique granular view for investors looking to manage longer term ESG credit risks.

Based on the UN-backed Principles for Responsible Investment’s Inevitable Policy Response scenario, refined and adjusted for the in-depth sector knowledge of Fitch’s rating analysts.

How it works?

10 30 50 70 90
Description of cumulative risks to a point in time (e.g. 2050) ESG trend is neutral to positive for sector prospects Fundamental demand drivers are neutral to positive, despite major changes to existing business models or a need for largeinvestment Solid demand drivers but a need for material changes to products or production methods,whichmay threaten profitability Major changes to markets, regulation and business modelarelikely to disruptprofitability for an extended period One or more ESG factors have the potential in a credible scenario to pose an existential threat to core business activities
Note: Higher scores denote greater vulnerability. Entities will be assigned scores between 0 and 100,combining sector scores and entity-specific modifiers. Source: Fitch Ratings

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Relevance Scores