---
title: Climate Policy and Debt
url: https://www.ml-quant.com/papers/ssrn/4806153/
site: ML-Quant (https://www.ml-quant.com)
updated: 2026-09-26
license: Summaries CC BY 4.0; links go to the original sources
index: https://www.ml-quant.com/llms.txt
identifier: SSRN 4806153
source_url: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4806153
featured: 2024-05-01
citations: unknown
topic: Risk, Credit & Banking
---


# Climate Policy and Debt

Research shows that climate and environmental policies significantly affect the relationship between a company's environmental impact and its credit risks and debt costs, with stricter policies increasing credit risk for polluting firms and reducing it for eco-friendly ones.

- Source: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4806153
- Identifier: SSRN 4806153
- Released: 2022-11-21
- First featured: Quant Letter No. 47 (2024-05-01): https://www.ml-quant.com/issues/2024-05-01/
- Citations (Semantic Scholar): not tracked
- Published in: not yet
- Topic: Risk, Credit & Banking

## Related

- [Joint Liability Model with Adaptation to Climate Change](https://www.ml-quant.com/papers/arxiv/2404.13818/): The study introduces the Environmental, Social, Economics (ESE) score, a comprehensive sustainable credit rating system for farmers, incorporating agricultural sustainability factors into personal credit assessments.
- [Carbon Risk Management & Credit Default Swaps](https://www.ml-quant.com/papers/ssrn/4611661/): Firms with robust carbon risk management have lower credit default swap spreads, suggesting a positive impact on their credit risk evaluation.
- [ESG Factors and Credit Risk of Firms](https://www.ml-quant.com/papers/ssrn/4596796/): The study finds a correlation between credit risk and Environmental Social and Governance (ESG) factors using Supervised Machine Learning techniques.
- [Climate Risks in Real Estate](https://www.ml-quant.com/papers/ssrn/5120353/): The study shows how physical climate risks, specifically river floodings, can affect the credit risk parameters and internal capital calibration of banks.
- [A Markov approach to credit rating migration conditional on economic states](https://www.ml-quant.com/papers/arxiv/2403.14868/): A novel credit rating migration model has been developed, incorporating economic state changes and utilizing Markov theory for various rating philosophies analysis.
- [Upper Comonotonicity and Risk Aggregation Under Dependence Uncertainty](https://www.ml-quant.com/papers/arxiv/2406.19242/): The research investigates the concept of dependence uncertainty and its effect on tail risk measures in relation to credit risk, showing that even minor positive dependence between losses can lead to perfectly correlated tails beyond a certain point.
