Key Impact Points:
- Over $508 billion in municipal bonds were issued in 2023, yet climate risk disclosures remain inconsistent and often inadequate.
- 17% of U.S. counties now face compound exposure to multiple climate hazards, with mounting disasters affecting credit ratings and capital access.
- The new Ceres guide offers practical frameworks and real-world examples to help issuers disclose risks, protect communities, and maintain investor trust.
Ceres Launches Climate Disclosure Guide for Municipal Bond Market
As climate-related disasters escalate in frequency and cost, Ceres has released “Leading with Transparency: A Guide to Strengthening Climate Disclosure and Resilience in the Municipal Bond Market” to help state and local governments improve transparency, access capital, and build long-term resilience.
“Climate-related risks are underappreciated in the U.S. municipal bond market. Hurricanes, floods, and other extreme weather pose a host of financial challenges for state and local issuers.” — BlackRock
Why Climate Disclosure Matters
Municipal governments—frontline responders to climate threats—are tasked with safeguarding infrastructure and services while maintaining capital access. The $4 trillion municipal bond market plays a critical role in funding these efforts, yet climate risk remains vastly underdisclosed.
In 2023, U.S. municipal bond issuance reached $508 billion. However, a growing number of municipalities face severe financial exposure:
- 17% of U.S. counties are subject to compound climate hazards like flooding, hurricanes, and wildfires.
- The 2025 Los Angeles wildfires caused $250 billion in damage and affected over $70 billion in outstanding municipal debt, triggering downgrades.
“The increasing frequency and severity of climate hazards pose growing financial risks for local government issuers in the $4 trillion U.S. municipal bond market.” — S&P Global Sustainable1
Real-World Risks, Real-World Consequences
Past disasters like Hurricane Katrina, Superstorm Sandy, and the Camp Fire in Paradise, California, underscore the need for proactive disclosure and planning. Los Angeles County alone may need to invest $12.5 billion through 2040 to address future climate impacts.
A Practical, Multi-Layered Approach
The Ceres guide outlines steps for municipal governments to improve climate-related disclosures across:
- Financial Statements: Adopting GASB guidance and including climate risks in MD&A sections.
- Bond Documents: Highlighting past events, financial impacts, risk classifications, and governance.
- Climate Action Reports: Voluntary reports based on frameworks like TCFD and IFRS S2.
“Without clear ESG information… potential buyers of municipal bonds are likely to conduct their own ESG analysis, which may not include all relevant information or context.” — Government Finance Officers Association
Examples to Learn From
The guide provides examples from:
- Miami-Dade County: Sea level rise strategies and resilience investments.
- Boston: Exposure to coastal flooding detailed in bond disclosures.
- Seattle: Emissions reduction plans and heat pump investments.
- DC Water: TCFD-aligned ESG reporting.
“It is established securities law that any climate risks that are material must be disclosed.” — Mark Kim, CEO, Municipal Securities Rulemaking Board
Bottom Line
Ceres urges municipal entities, especially those with over $1 billion in outstanding debt, to integrate climate resilience into their financial practices. Transparency can preserve credit ratings, improve investor confidence, and strengthen a community’s ability to withstand and recover from climate events.
“Plans are worthless, but planning is everything.” — Dwight Eisenhower (quoted in the report)
To see the full report, click here
