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S&P: Climatic Perils Are Likely To Intensify, Hitting Poorer Sovereigns Harder, Says S&P Report



Standard & Poor’s Ratings Services for the first time has simulated the hypothetical ratings effect of natural disasters, and found that rare but calamitous events can have a measurable credit impact, in a report titled,”Storm Alert: Natural Disasters Can Damage Sovereign Creditworthiness.”

“Our simulations indicate the impact that rare but severe natural disasters–those that can be expected once every 250 years–can bring to bear on sovereign ratings. The biggest ratings impact is likely to come from earthquakes, followed by tropical storms,” Mr. Kraemer said. “Geographically, ratings of sovereigns in Latin America and the Caribbean appear to be most at risk, followed by Asia, taking into account higher geologic and climatic hazards than in the rest of the world.”

“The ratings of low-income developing sovereigns are particularly vulnerable to severe natural catastrophes,” Mr. Kraemer added, “followed by emerging and the less threatened advanced economies. It is therefore no coincidence that sovereigns with lower ratings tend to be more vulnerable to natural catastrophes than higher-rated sovereigns.”

In Japan for example, a 1-in-250-year event could cause a significant economic downturn and a decline in the sovereign rating by at least two notches (see table below), with potentially severe economic and financial repercussions for the rest of the world. We believe that in the immediate aftermath, the earthquake would result in a disruption of trade flows, block supply channels, with a simultaneous sell-off of foreign assets held by the Japanese residents and partial repatriation of Japanese financial assets held abroad, possibly causing an economic slowdown in the rest of the world and turmoil in global financial markets.

To quantify hypothetical ratings impact, Standard & Poor’s used direct damage data provided by Swiss Re in constructing a simplified sovereign rating tool. We simulated the impact over a five-year period of a one-in-250-year
occurrence of four perils (earthquakes, tropical storms, winter storms, and floods) on key macroeconomic variables: GDP growth, the balance of payments, as well as on general government debt and deficits.

We see particularly large potential direct economic damage and related pressure on creditworthiness for sovereigns on or close to the edges of Earth’s geological plates, for example, around the Pacific Rim (for example Chile, Costa Rica, Ecuador, Japan, Panama, Peru, Philippines, Taiwan), in the Caribbean (Costa Rica, Dominican Republic, Panama), and on the North Anatolian fault (Turkey).

Sovereign – Peril – Potential downgrade (notches)
Dominican Rep.   – Tropical storm and surge   -2.5
Chile – Earthquake – 2.4
Bangladesh – Tropical storm and surge – 2.2
Japan – Earthquake – 2.1
Costa Rica – Earthquake – 1.8
Vietnam – Tropical storm and surge – 1.8
Peru – Earthquake  – 1.8
Thailand – Flood – 1.6
Taiwan – Earthquake – 1.3
Turkey – Earthquake – 1.3

There are wide differences among the sovereigns concerned (see table). For example, for the most affected sovereigns listed above, the hypothetical ratings would decline by at least one notch for some (for example, for Costa
Rica, Ecuador, Panama, Peru, Philippines, Taiwan, and Turkey) and almost two or potentially more for others (Chile and Japan). In many other sovereigns, the ratings impact is at least half a notch, indicating material downward pressure (Colombia, Dominican Republic, Indonesia, Israel, Italy, Mexico, and New Zealand).

S&P believe that one way to mitigate the economic and ratings implications of natural disasters is catastrophe insurance. In the case of the five biggest earthquakes covered in the study, the rating impact would be a downgrade of about one notch if 50% of the damage were reinsured, compared with almost two notches for no insurance coverage at all. We believe that these findings are particularly relevant for emerging and developing sovereigns. They are typically the most vulnerable to natural disasters in terms of direct and indirect economic losses and, as a result, creditworthiness. It is also in those economies where insurance coverage is typically low.

For other perils, sovereign ratings in our sample would come under pressure if a one-in-250-year tropical storm hits, although generally less than in the case of an earthquake scenario.

For floods, the economic impact on the most advanced developed sovereigns in Europe, while not negligible, appears to be limited and unlikely to lead to sovereign rating downgrades. Among the sovereigns covered in this report,
severe floods would cause the most economic damage in Hungary and Thailand, weakening their macroeconomic metrics and creditworthiness.

Sovereigns in Europe are frequently hit by winter storms, but given the relatively low direct damage as a percentage of value and high insurance coverage, macroeconomic consequences of winter storms do not appear to be
significant. Winter storms are unlikely to lead to downward pressure on sovereign creditworthiness.

“Looking ahead, climatic perils could intensify in line with past trends as climate change gathers pace. Specifically we view it as possible that storms and floods will become more frequent and more severe as the average global temperature rises and weather patterns shift,” Mr. Kraemer said.

“Before long, this could lead to an upward revision of the damage caused by one-in-250-year catastrophes, and thereby also result in a stronger hit to ratings than suggested in this report,” he added. “We expect that climate
change-induced intensification of the frequency and severity of natural disasters would hurt the ratings on poorer sovereigns the most, adding to global ratings inequality.”


5 Eco-friendly Appliance Maintenance Tips




Eco-friendly Appliance
Shutterstock Photos - By Punyhong |

Modern day society is becoming ever more conscious about the effects of human consumption on the environment & the planet.

As a collective, more people are considering taking action to positively counteract their environmental footprint. This is accomplished by cutting down on water consumption, recycling and switching from plastic to more sustainable materials. Although most people forget about the additional things that can be done at home to improve your individual eco footprint.

Appliances, for example, can be overlooked when it comes to helping the environment, despite the fact they are items which are found in every household, and if they are not maintained effectively they can be detrimental to the environment. The longer an appliance is used, the less of an impact it has on the environment, so it is essential for you to keep them well maintained.

If you’re considering becoming more eco-conscious, here are 5 handy appliance maintenance tips to help you.

Don’t Forget to Disconnect From Power First

General maintenance of all your appliances start with disconnecting them from power; microwaves, washing machines and ovens all use residual energy when plugged in, so it’s essential to unplug them.

Disconnecting the plugs can help keep them in their best condition, as it ensures no electrical current is running through them whilst they are supposed to be out of use. Additionally, this can help you save on energy bills. By doing this you are minimising your energy footprint.

Here we break down 4 tips to keep the most popular household appliances maintained.

Eco-Friendly Oven Maintenance

Ovens generally require very little maintenance, although it is essential to stay on top of cleaning.

A simple task to make sure you don’t have any issues in the future is to check the oven door has a tight seal. To do this ensure the oven is cold, open the oven door and use your hands to locate the rubber seal. You can now feel for any tears or breaks. If any have occurred simply replace the seal. More oven tips can be read here.

Eco-Friendly Refrigerator Maintenance

When keeping a fridge in good condition, don’t forget about exterior maintenance. Refrigerator coils, although an external fixture, can cause damage when overlooked.

Refrigerator coils can be found either at the front or rear of a fridge (check you user manual if you are unsure of its location). These tend to accumulate various sources of dust and dirt over a substantial time-period, which clog refrigerator coils, causing the refrigerator to have to work twice as hard to stay cool. An easy tip to solve this is to periodically use a vacuum to get rid of any loose dirt.

Eco-Friendly Washing Machine Maintenance

Most people tend to remember the basics tasks for maintaining a washing machine, such as not to overload the machine, not to slam the door and to ensure the washing machine is on a solid and level platform.

In addition, it is necessary to routinely do a maintenance wash for your washing machine. This means running an empty wash on the highest temperature setting and letting it complete a full wash to erase any build up and residue. You should repeat this task at least once a month.

Try to schedule this task around your bulk wash load times to save on water consumption.

This will help keep your washing machine in peak working condition.

Eco-Friendly Dishwasher Maintenance Tips

Dishwasher maintenance can be simple if implemented after every wash cycle.

To keep your best dishwasher hygiene standards, scrape away excess food whilst making sure to keep the filter at the bottom of the cavity empty between cycles. This simple task can be highly effective at preventing food build up from occurring in your dishwasher.

If you need additional tips or tasks you, can reference your manufacturer’s guidebook to check for a full breakdown. You can also head to Service Force’s extensive database of repair and maintenance manuals – including extensive troubleshooting guides for all of the critical appliance maintenance procedures.

In conclusion, you can save both money and energy by keeping your appliances in peak condition. The steps outlined in this guide will help us all preserve the environment and reduce industrial waste from discarded appliances.

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Two Ancient Japanese Philosophies Are the Future of Eco-Living



Shutterstock Photos - By Syda Productions |

Our obsession with all things new has blighted the planet. We have a waste crisis, particularly when it comes to plastic. US scientists have calculated the total amount of plastic ever made – 8.3 billion tons! Unfortunately, only 9% of this is estimated to have been recycled. And current global trends point to there being 12 billion tons of plastic waste by 2050.

However, two ancient Japanese philosophies are providing an antidote to the excesses of modern life. By emphasizing the elimination of waste and the acceptance of the old and imperfect, the concepts of Mottainai and Wabi-Sabi have positively influenced Japanese life for centuries.

They are now making their way into the consciousness of the Western mainstream, with an increasing influence in the UK and US. By encouraging us to be frugal with our possessions, (i.e. using natural materials for interior design) these concepts can be the future of eco-living.

What is Wabi-Sabi and Mottainai??

Wabi-Sabi emphasizes an acceptance of transience and imperfection. Although Wabi had the original meaning of sad and lonely, it has come to describe those that are simple, unmaterialistic and at one with nature. The term Sabi is defined as the “the bloom of time”, and has evolved into a new meaning: taking pleasure and seeing beauty in things that are old and faded. 

Any flaws in objects, like cracks or marks, are cherished because they illustrate the passage of time. Wear and tear is seen as a representation of their loving use. This makes it intrinsically linked to Wabi, due to its emphasis on simplicity and rejection of materialism.

In the West, Wabi-Sabi has infiltrated many elements of daily life, from cuisine to interior design. Specialist Japanese homeware companies, like Sansho, source handmade products that embody the Wabi-Sabi philosophy. Their products, largely made from natural materials, are handcrafted by traditional Japanese artisans – meaning no two pieces are the same and no two pieces are “perfect” in size or shape.


Mottainai is a term expressing a feeling of regret concerning waste, translating roughly in English to either “what a waste!” or “Don’t waste!”. The philosophy emphasizes the intrinsic value of a resource or object, and is linked to hinto animism, the notion that all objects have a spirit, or ‘kami’. The idea that we are part of nature is a key part of Japanese psychology.

Mottainai also has origins in Buddhist philosophy. The Buddhist monastic tradition emphasizes a life of frugality, to allow us to concentrate on attaining enlightenment. It is from this move towards frugality that a link to Mottainai as a concept of waste can be made.

How have Wabi-Sabi and Mottainai promoted eco living?

Wabi-Sabi is still a prominent feature of Japanese life today, and has remained instrumental in the way people design their homes. The ideas of imperfection and frugality are hugely influential.

For example, instead of buying a brand-new kitchen table, many Japanese people instead retain a table that has been passed through the generations. Although its long use can be seen by various marks and scratches, Wabi-Sabi has taught people that they should value it because of its imperfect nature. Those scratches and marks are a story and signify the passage of time. This is a far cry from what we typically associate with the Western World.

Like Wabi Sabi, Mottainai is manifested throughout Japanese life, creating a great respect for Japanese resources. This has had a major impact on home design. For example, the Japanese prefer natural materials in their homes, such as using soil and dried grass as thermal insulation.

Their influence in the UK

The UK appears to be increasingly influenced by thes two concepts. Some new reports indicate that Wabi Sabi has been labelled as ‘the trend of 2018’. For example, Japanese ofuro baths inspired the project that won the New London Architecture’s 2017 Don’t Move, Improve award. Ofuro baths are smaller than typical baths, use less water, and are usually made out of natural materials, like hinoki wood.

Many other UK properties have also been influenced by these philosophies, such as natural Kebony wood being applied to the external cladding of a Victorian property in Hampstead; or a house in Lancaster Gate using rice paper partitions as sub-dividers. These examples embody the spirit of both philosophies. They are representative of Mottainai because of their use of natural resources to discourage waste. And they’re reflective of Wabi-Sabi because they accept imperfect materials that have not been engineered or modified.

In a world that is plagued by mass over-consumption and an incessant need for novelty, the ancient concepts of Mottainai and Wabi-Sabi provide a blueprint for living a more sustainable life. They help us to reduce consumption and put less of a strain on the planet. This refreshing mindset can help us transform the way we go about our day to day lives.

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