(Con):...In general, corporate borrowing is not linked to
specific activities. At the weekend, when I was at home thinking
about what I was going to say on these amendments, I found a copy
of Shell’s most recent accounts, which I looked at
to see how its balance sheet was made up. Most of
Shell’s debt is in generic corporate bonds, rather
than for specific activities within Shell Like
other major oil and gas companies, Shellhas a mix
of activities, including those which the green lobby will approve
of.
As drafted, by reference to
“exposures associated with the funding of existing fossil fuel
production and exploitation”,
the amendments are probably ineffective because lending is not
likely to be hypothecated in the way the amendments assume. I
should also say that Shell as a corporate
borrower, currently has long-term credit ratings of A+ and Aa2,
which imply a low risk of default and therefore a relatively low
likelihood of loss needing to be taken account of in the way that
assets are risk weighted...
(LD):...Finally, I will talk to Amendment 42, which deals
with credit rating agencies. As the noble Baroness, Lady Noakes,
pointed out, an organisation such as Shell has a very high credit
rating and who would not lend to an organisation with a credit
rating on that scale? We always—I would say this to any
individual Minister—have to be somewhat cynical when we look at
the product of credit rating agencies. I know that they try to
behave with integrity, but the companies pay their fees and their
wages and that tends to incline them to think in very narrow
terms. None of the credit rating agencies got right the crisis
that we saw in 2008-09, even though it developed over quite a
period of years leading up to 2008-09. This was not an overnight
event; it was a crisis that built over a decade and, in that way,
it is very similar to the climate change crisis...
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