“What we want people to realize is: If you’re exposed, we know that,” Jones, with Moody’s, told Bloomberg News last fall. “That’s taken into your credit ratings.”
A year later, no cities or counties have been penalized for failing to heed those calls. That’s despite warnings from disaster experts about the widespread failure of local governments to meaningfully prepare for the growing risks of global warming. Meanwhile, many of the cities and counties most exposed to the effects of climate change have received perfect ratings over the past year.
In May, Fitch and Moody’s both issued triple-A ratings to Wilmington, North Carolina. Four months later, Wilmington, which was flooded by Hurricane Matthew in 2016, was inundated again by Hurricane Florence, causing more than $250 million in damage and leaving the city inaccessible by car, boat or plane. That same month, S&P and Moody’s gave AAA ratings to Boston, which the World Bank calls one of the 10 cities worldwide that are most financially exposed to flooding.
S&P acknowledged the threat climate change poses to Boston, but added that the city has released a study that “outlines the plan for mitigating potential weather-related threats.”
In August, Moody’s and Fitch gave AAA ratings to Ocean County, New Jersey, which according to the research group First Street is home to the zip code that has lost more in relative property value than anywhere else in the country because of increased tidal flooding. In September, Moody’s and S&P issued perfect ratings to Palm Beach, Florida, a narrow barrier island where $1.3 billion in property value is less than two feet above sea level, according to data from Climate Central, a Princeton-based research group. Regular flooding is getting worse, and no point is more than seven feet above the ocean.
Last November, all three companies issued perfect AAA ratings to Charleston County, South Carolina, where flooding is so frequent that the Charleston City website includes a page titled “Why does it seem like Charleston always floods when it rains?”
Kurt Forsgren, a managing director at S&P, said the company incorporates climate change into its evaluations. “For those communities that are exposed, we are asking the kind of questions that you’d expect us to ask about long-term risk and mitigating it,” he said.
Executives at Fitch said that among the 1,000 or so local governments they rate across the country, officials are preparing for climate risks.
“We have not seen this sort of demonstrated management weakness or lack of attentiveness to this issue where it matters most,” said Michael Rinaldi, a senior director at Fitch. “If there were a situation where the risks were quantifiable and obvious, we would certainly not sit back and avoid taking rating action.”
Last month, however, FEMA Administrator Brock Long berated local officials around the country for failing to prepare for extreme weather.