The World Bank has completed the latest stage of its research partnership with pension titan GPIF by launching an ESG data hub for investors interested in sovereign risk.
The development bank announced a collaboration on ESG in fixed income with Japan’s $1.4trn Government Pension Investment Fund back in 2017, releasing a number of reports and coordinating investor discussions on the topic.
Now, it has turned its attention to government debt with the unveiling of “a free, open and easy to use online platform that provides users with sovereign-level ESG data”.
Despite being the bedrock of many fiduciary investors’ portfolios, sovereign bonds are often considered to be beyond the remit of ESG screening or analysis for a number of reasons. Speaking to RI earlier this year, Niklas Ekvall, the CEO of Swedish pension fund and sustainability champion AP4 said it was “difficult to engage with sovereign issuers”, joking: “I’m not sure Mr Trump would listen if I told him I disagreed with his policies on climate change.”
In September, Urban Angehrn , the CIO of another stalwart of green finance, Zurich Insurance, told RI: “In government bonds, there’s not a lot for us to do, because we rarely have room to choose whether or not to invest… So, if I’m hiring a manager to run gilts for me, frankly, ESG integration is irrelevant.”On the topic of climate change, particularly, there have been concerns raised around the role and influence of investors when it comes to elected governments. Some argue that private sector intervention on climate policy could undermine democracy.
“Strong interest for improved information that enables ESG analysis”
However, the World Bank says it ran consultations with investors in its own bonds and identified “strong interest for improved information that enables ESG analysis” in the sovereign space. The new platform “is designed to help investors better align ESG analysis with key sustainable development policy indicators and analysis, as well as to increase data transparency,” with a particular focus on emerging and developing markets.
The portal includes 17 themes which, according to the World Bank, would provide a clear picture of “policy performance and country conditions” if data was available. There are currently 67 indicators that reflect the Sustainable Development Goals (SDGs), with more – which are expected to be based on geo-spatial information and big data – in the pipeline.