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Considering Climate Change

Climate Portfolio Considerations and Sovereign Debt Implications

How are investors tackling the issue of climate change within their portfolios? Robeco's survey polled over 300 institutional investors on the subject, finding that in many cases, climate change is increasingly becoming a central pillar within their overall investment policies.   

Climate risk and increased sovereign debt issuance may also provide a unique opportunity for investors to engage with central banks on climate-related issues. The two may seem unrelated at first, however, several papers below outline the specific climate-related risks that are most relevant for long-term sovereign debt investments.

Dry Riverbed: Climate Change

Global Climate Survey 2021 (Robeco)

Robeco's 17-page climate survey describes how investors are tackling the climate change issue, the approaches that are being taken, and some of the progress that is being made.

Anticipating the Climate Change Risks for Sovereign Bonds (FTSE Russell, 2021)

FTSE Russell looks at how sovereign debt could be impacted by climate change, both from physical risks like temperature increases and from the risk of a disorderly transition process.

Podcast: Alice Hill on climate resilience after Covid-19 (Man Group, Feb 2021)

Alice Hill, climate change and climate policy expert at the Council on Foreign Relations, is interviewed by Jason Mitchell, Man Group's Co-Head of Responsible Investment, about U.S. President Joe Biden's new climate agenda in this 33-minute podcast.

Can Bond Investors Influence Government Climate Action? (Aviva Investors, 2021)

For compliance reasons, this paper is only accessible in certain geographies

Sky-high deficits may provide bond investors with an opportunity to reach out to governments directly and engage with them on climate change issues.

ESG Risks in Sovereign Bond Portfolios (EDHEC-Risk Institute, 2021)

This comprehensive 152-page study focuses on the measurement and management of ESG risks within sovereign debt portfolios and other issues relevant to sovereign bond investors.

World Energy Transitions Outlook: 1.5°C pathway (IRENA, 2021)

The International Renewable Energy Agency outlines a pathway to achieving the goals inherent within the Paris Agreement. They also provide details on the energy transition and ways that renewables such as hydrogen and bioenergy can assist in these critical goals.

Top-Down Portfolio Implications of Climate Change (QMA, 2021)

This paper investigates what impact a range of climate change scenarios might have on economic growth, inflation, and long-term asset return forecasts.

A Whole-Economy Carbon Price for Europe and How to Get There (Bruegel, 2021)

What role does carbon pricing play in helping to achieve net zero emissions, as pledged recently by the European Union? This Bruegel paper looks at the challenges that underlie the effort to create a uniform carbon price applicable across many different sectors.

Climate Change and Central Banks: The expectations channel (VoxEU, 2021)

Expectations of climate change may have policy implications for central bankers. This VoxEU article explains why.

Climate Content Hub – Urgency (Robeco, 2021)

Robeco has several 'hubs' on their website, each looking at climate change through a different lens. This one focuses on the urgency of the problem at-hand, issuing a call-to-action for asset managers, corporations, and individuals worldwide.