Executive summary

Municipalities face escalating risks from increasingly intense wildfires, droughts, and storms that threaten critical infrastructure, tax bases, and long-term fiscal stability. In 2025 alone, the United States experienced 23 separate billion-dollar disasters totalling more than $115 billion in damages, nearly four times the annual average recorded in the 1990s. The $4.4 trillion US municipal bond market is at the centre of these risks, as it finances more than 70% of the nation’s infrastructure and serves as the primary source of capital for rebuilding. Although the share of bond offerings referencing climate change jumped from 16.5% in 2017 to 53.5% in 2025, more disclosure does not equate to higher quality. Research indicates that 33% of bond offerings make no mention of climate or extreme weather, and only 12% provide the financial reporting needed to evaluate how risks are measured and managed.

Key findings

The report identifies five major gaps in current disclosure practices. Firstly, generic language dominates, with issuers frequently omitting location-specific perils. One-third of sampled bonds from the highest-risk metro areas make no mention of climate threats, and those that do often rely on boilerplate language. For instance, despite having the highest projected annual heatwave days, a 2024 bond offering from Phoenix, Arizona, only briefly mentions heat mitigation without providing a comprehensive strategy. Secondly, even when disclosed, information is rarely decision-useful. Only 15% of bonds disclose who is accountable for managing climate risk, and just 12% provide the quantitative metrics required by investors to track progress and assess financial exposure.

Thirdly, disclosures remain backward-looking, documenting past disasters while saying little about the future. This is a significant omission given that municipal bonds are typically 20-to-30-year instruments. Fourthly, bonds facing similar physical risks provide materially different levels of disclosure, even within the same county. This inconsistency prevents investors from relying on offering documents to assess risk across different issuers. Finally, disclosures fail to capture investments in resilience. Many municipalities are actively reducing risk through infrastructure upgrades, such as relocating wastewater plants or building storm-resilient power grids, but these actions are not consistently reflected in bond documents, meaning issuers may miss out on lower borrowing costs that transparent disclosure could unlock.

Methodology

This research analysed 60 recent municipal bond offerings from issuers in the 20 US metropolitan statistical areas (MSAs) most exposed to severe weather hazards. To identify these MSAs, the report first assessed climate exposure across the 50 most populous US MSAs using Cotality’s Composite Risk Score as a proxy for overall physical risk. The sample of 60 bonds included a diversified mix of general obligation and revenue bonds from cities, counties, utilities, and transportation authorities. Each offering was scored against the four pillars of the Task Force on Climate-related Financial Disclosures (TCFD) framework: Governance, Strategy, Risk Management, and Metrics and Targets. Scores were assigned on a binary basis for each pillar, resulting in an alignment score ranging from 0 to 4.

Recommendations

Issuers are encouraged to make resilience work visible to the market by explicitly incorporating sustainability and resilience programmes into their official statements. Location-specific data regarding physical assets and the frequency and intensity of hazards should replace generic language. The report recommends the full adoption of the TCFD framework, which involves identifying responsible oversight departments, describing risk management strategies, and establishing at least one or two quantifiable metrics. Issuers should also enhance forward-looking planning by including projections for risks such as sea-level rise or future water stress. Finally, coordination with other issuers in the same metropolitan area is advised to develop shared disclosure frameworks and acknowledge regional interdependencies, thereby raising the standard of disclosure for all participants.

Appendix

The appendix provides a detailed breakdown of risk scores across the 50 largest MSAs and specific TCFD alignment scores for the 60 municipal bond issuances reviewed. It outlines the methodology for climate risk scoring, noting that the Composite Risk Score incorporates acute perils such as flooding, wildfire, and hurricane winds, supplemented by chronic risk measures like heatwave risk.