Poland faces the biggest green transition risks, says Fitch

Andrew Gombert/PAP/EPA

The highest decarbonisation transition risks in Central and Eastern Europe (CEE) are visible in Poland, the rating agency Fitch said in a report on Thursday.

"The transition cost to a lower-carbon economy is one of the main climate change risks facing sovereigns, and is something that will affect economic activity, public finances and other factors potentially relevant to creditworthiness," Fitch said in the report.

"Poland, Bulgaria and Romania have the highest decarbonisation transition risks in central and eastern Europe (CEE)," Fitch added.

According to Fitch, the transition risks may have an impact on a country's credit rating.

"Although ratings are forward-looking, they typically place more weight on near-term developments than uncertain long-term projections," the rating agency went on to say. "In this context, the rating impact in CEE would appear manageable, particularly if transition plans are well designed and utilise efficient policy tools (such as carbon taxes and pricing), costs are spread over time and investment sources can be identified."

"Nevertheless, some downward pressure on ratings could materialise for sovereigns with the greatest vulnerability to decarbonisation transition risks," it added.

Climate risks can trigger more ratings adjustments when their effects become more visible, immediate and tangible, according to Fitch.

According to Fitch, Poland’s rating is 'A-'. The same score was given by another rating agency S&P, while Moody's, the third global rating agency, evaluated Poland's creditworthiness the highest, at A2. All three outlooks are stable.