Moody’s: EDF’s Transition Faces Long-term Risks

Moody’s Investors Service has assessed French utility provider Électricité de France’s (EDF) carbon transition plans, ranking them as “advanced”. Moody’s Net Zero Assessment (NZA) uses a five-point scale ranging from NZ-1 (leading) to NZ-5 (limited). The ranking reflects the rating agency’s opinion of an entity’s carbon emissions reduction profile – considering not only its ambitions, but also the implementation of plans and governance around greenhouse gas reductions. EDF received a NZ-2 score, reflecting reduction targets consistent with the most ambitious Paris Agreement goals on limiting temperature increases. However, certain long-term execution risks lowered the company’s score from NZ-1, which according to Moody’s was “potentially achievable at this level of ambition”. The rating agency highlighted EDF’s importance as a vehicle for the decarbonisation of the French economy, but said its strategy contained long-term risks. For instance, the building of new nuclear plants to replace retired ones could face cost overruns and delays. “Market participants confront considerable challenges in comparing decarbonisation plans across companies because of inconsistent disclosure requirements, differences in the magnitude, coverage and timing of targets, as well as divergence in the capacity of firms to implement business transformation plans and meet stated targets,” said Brian Cahill, Global Head of ESG at Moody’s Investors Service. The NZA is not a credit rating, and is only provided upon request by an entity. This is the second NZA published by Moody’s, following the assessment last week of Italian natural gas provider Snam, which received a NZ-3 score.

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