Anticipating The Climate Change Risks For Sovereign Bonds Part 2: Insights On The Financial Impacts

Thomas Lorans & Julien Moussavi

Research Organisation
FTSE Russell

Report Date
June 1, 2021

Document summary

The huge economic transformation to achieve the Paris Agreement objectives is requiring a sizeable reallocation of assets. This assigns the financial sector a key role in tackling climate change. Forward-looking analysis in a scenario-based framework is crucial to assess the financial risks of climate change.

This paper, which is the second of a two-part study, explores the effects of climate change risks on sovereign bond returns and proposes an innovative and practical methodology that measures the anticipated costs from climate change. Other research that touches on the issues raised in this report can be found here