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House Capital Investment Committee reviews impact of Climate Change on State Investments

Thursday, March 24, 2022

St. Paul, MN - Ahead of upcoming hearings on climate resiliency projects, today the House Capital Investment Committee heard from a series of experts on the impacts of climate change on state investments and Minnesota’s credit rating. 

“As one of the fastest warming states in the nation, we’re not only grappling with the physical impacts of climate change, but today’s hearing shed light on the future financial impacts as well,” said Rep. Fue Lee (DFL - Minneapolis), chair of the committee. “We can no longer ignore the effects of climate change to our state and local infrastructure, or even our credit rating, with increased severity in floods, droughts, and other impacts to investments. We must assess the risk of climate change to prevent and minimize damage to our critical infrastructure and state’s long-term fiscal health.”

The committee heard presentations from The Pew Charitable Trusts, S & P Global, National Municipal Research, and Municipal Market Analytics.

With the evolving nature of environmental, social, and governance (ESG) factors, rating agencies believe certain risks may be more influential and material to creditworthiness for U.S. public finance (USPF) issuers in the coming years, and could lead to credit pressure. Central bankers, including the US Federal Reserve, now link extreme climate events to financial instability.

Investing in climate change adaptation and mitigation have been shown to protect communities and increase their value for current and prospective residents and businesses. In response, many states and municipalities have developed Climate Action Plans. Minnesota’s and other states’ plans can be found here

Supporting materials from today’s hearing can be found on the committee webpage. Video recording of the hearing will be available on the House Public Information YouTube Channel