An alliance of bond investors representing $5 trillion in assets says its first study of sovereign issuers shows most of their climate pledges lack the necessary ambition.
The group, which calls itself the Assessing Sovereign Climate-related Opportunities and Risk project, says that just four of the 25 countries it analyzed have emissions reduction targets that are aligned with a 1.5C pathway, namely Bangladesh, Barbados, Kenya and Morocco. The UK and the U.S. are among sovereign issuers that aren’t aligned with limiting global warming to 1.5C, ASCOR said. The figures reflect a so-called fair share assessment, which takes into account a country’s historical emissions, income and population.
“Evaluating how countries manage climate mitigation and adaptation risks” will help investors in their “analysis of their fiscal sustainability,” said Carmen Nuzzo, executive director at the Transition Pathway Initiative Centre, the academic partner of the project. “It is about fair pricing and impact, not politics.”
Sustainable finance is less established in sovereign debt markets than in corporate securities, where fund managers apply an array of strategies under the rubric of environmental, social and governance investing. That’s because metrics and models designed for corporations don’t easily translate to governments, while ESG scores for countries have been criticized for being too correlated to a nation’s wealth.
ASCOR, whose members include pension funds and other institutional investors, says its data tool identifies the most critical environmental data points to be used in sovereign debt financial analysis. It aims to put “climate change at the heart of sovereign investment decision-making,” according to Victoria Barron, a co-chair of ASCOR and head of sustainable investments at Brightwell.
Only three of eight high-income countries analyzed — Japan, Germany and France — allocate at least 0.2% of their GDP to climate finance, ASCOR said based on 2020 data. Australia, Canada, Italy, the UK and U.S. fell short of that threshold. Rich nations were supposed to provide $100 billion a year in climate finance for emerging economies starting in 2020, a milestone they’ve only just reached.
The ASCOR research also found that over half the countries analyzed have passed a framework climate law to enshrine an effective climate change response into their legal system.
Adam Matthews, co-chair of ASCOR and chief responsible investment officer for the Church of England Pension Board, said that investors need to “roll up our sleeves and engage practically with countries to focus on this ambition gap,” and then “work to close it.”
Advisors can set their practice apart and win more business with a powerful graphic describing their unique business and value proposition.
The Labor Department's reversal from its 2022 guidance has drawn approval from crypto advocates – but fiduciaries must still mind their obligations.
With $750 million in assets and plans to hire a RIA Growth Lead, Autopilot is moving beyond retail to court advisors with separately managed accounts and integrations with RIA custodians such as Schwab and Fidelity.
Elsewhere on the East Coast, a Boca Raton-headquartered shop has acquired a fellow Florida-based RIA in "a natural evolution for both organizations."
After advising on nearly $700 million in retirement assets, 27-year veteran Greg Mykytyn is bringing his expertise in ESOP and 401(k) plans to the national RIA in Texas.
How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave
From direct lending to asset-based finance to commercial real estate debt.