September 4, 2024

Pork, beef producers in developed markets more open to credit downgrades caused by climate-related risks

Pork and beef producers in developed markets are becoming more vulnerable to credit downgrades triggered by climate-related risks, according to Fitch Ratings.

Firms face rising costs as a result of stricter government policies to promote cuts to emissions, as well as the introduction of newer technologies and improvements to manure management in pig farms, the credit ratings agency said on August 30 in an emailed response to questions. For pig producers, "emerging markets are significantly less vulnerable, given the stable domestic demand for pork and delayed implementation of climate policies," Fitch said.

The beef industry is likely to be challenged in developed markets by shrinking demand as populations decline, along with health concerns and the impact of climate targets.

Global food systems account for about a third of emissions caused by human activity, with animal products responsible for about 60% of that total, according to the UN Intergovernmental Panel on Climate Change.

Fitch found that one in five rated corporate issuers could be exposed to downgrade risks by 2035 as a result of rising climate-related vulnerabilities, similar to a previous 2023 analysis. More than half of issuers with elevated risk levels are currently investment grade, according to a report published by the agency.

- The Business Times