Friday, December 4, 2020, 12:05 PM - 12:20 PM | Taking the Temperature of Sovereign Bond Portfolios

The global sovereign debt market is one of the largest asset classes in the world, yet fixed income markets have typically lagged other asset classes in relation to ESG integration. Sovereign debt investors are exposed to a range of climate-change risks that are typically not well understood or incorporated in the investment process. Part of the challenge has been the lack of sustainable investment products and viable climate data. During this session, we will talk about three important climate risk pillars to consider when looking to make asset allocations to sovereign bonds and climate strategies:

  • Transition risk – the level of climate related risk exposure of a country’s economy as measured by the distance to reach the modelled emissions needed to meet a 2°C alignment
  • Physical risk - the level of climate related risk exposure to a country and its economy from the physical effects of climate change
  • Resilience - a country’s preparedness and action to cope with its level of climate related risk exposure