HomeRI ResourceFTSE RussellAnticipating the climate change risks for sovereign bonds (Part 3)
Research and White Paper

In this paper, we illustrate how climate change could materialize should no further mitigation efforts be implemented. We focus on two specific climate hazards: (i) the average temperature and (ii) the frequency of very hot days. Then, building on the methodologies developed in the first two papers in this series, we continue our exploration of quantifying financial risk from climate change for sovereign issuers. This analysis provides more detailed results, in terms of time horizons, countries and climate scenarios, compared to our previous studies.

Read this paper for a deeper understanding of our three main findings:

  • Learn which countries are most vulnerable to climate change, and which countries have a high default risk due particularly to their lower fiscal capacities;
  • Find out how soon financial instability in the sovereign market from unmitigated climate change might be seen;
  • Understand how even a Paris-aligned scenario will lead certain regions and countries to still be exposed to significant physical risks.  
CATEGORIES: Asset Classes: Debt / Credit / Fixed Income