In July 2020, Moody’s Investors Service requested public feedback on their “Proposed framework to assess carbon transition risks for electric power companies.” EPRI submitted detailed comments, which we are providing to the public via this publication. EPRI has been exploring the complex topic of climate-related risk for several years, particularly low-carbon transition risk, and completed two studies directly relevant to Moody’s efforts. EPRI also has extensive related scientific expertise and a long history of research community leadership and participation, including in the Intergovernmental Panel on Climate Change (IPCC) and the Task Force on Climate-Related Financial Disclosures (TCFD) Advisory Group for Scenario Guidance. Based on EPRI’s research and expertise, EPRI’s comments suggest that Moody’s proposed framework be reconsidered to more accurately inform investors, companies, and communities on a company’s risk. EPRI’s comments noted that Moody’s proposed framework did not assess an individual company’s actual carbon transition risk, and that EPRI had significant concerns about the ability of the framework as structured to effectively inform. EPRI’s full comments include high-level feedback, EPRI’s list of technical considerations for low-carbon transition risk analyses, general comments on Moody’s proposed framework, and detailed comments related to individual components of the framework. In addition, EPRI’s comments are relevant to other transition risk assessment frameworks proposed by Moody’s and can be helpful to informing and assessing risk assessment and greenhouse gas goal setting approaches proposed by other organizations. Note that, Moody’s has since revised their methodology and begun applying it to utilities in the United States. The revised methodology has many of the same elements as Moody's proposed framework. As such, EPRI’s comments can be helpful in interpreting Moody’s “scores” and engaging with stakeholders.
Authors Chris DeLyser Roney