INSIGHT by ASCOR
Assessing Sovereign Climate-Related Opportunities and Risks (ASCOR) is the first, public investor framework to assess sovereign bond issuers on climate change
〉ASCOR has been a collaboration by asset owners and asset managers, supported by international investor networks, to incorporate financially material climate change information when assessing sovereign bond investments.
〉The final framework will result in an independent, freely, and publicly available assessment tool intended to support investors achieve their net zero goals; help them engaging with issuers to find a common understanding of the transition at a national level, as well as giving the opportunity to sovereigns to showcase their progress in addressing climate change.
〉ASCOR has woven the principles of fairness into the framework with the aim of encouraging financial flows to support a resilient and just low-carbon transition, especially in countries that are least able to finance it themselves.
〉The framework has been developed in collaboration with the Transition Pathway Initiative (TPI) Global Climate Transition Centre based at the London School of Economics and Political Science (LSE) and Chronos Sustainability.
〉Today marks the launch of a public consultation with feedback from relevant stakeholders by 31st March 2023.
The framework sets out a common basis to assess individual country climate change approaches and will reinforce public disclosures to aid investors to understand sovereign action and progress. It builds on existing data but will also further enable issuers to detail material information, so that investors can more effectively support country transition plans.
For example, the framework will focus on country sustainable finance plans, policies and transition requirements both in terms of mitigating climate change as well as building resilience to climate impacts. Investors are being increasingly required by many regulators to demonstrate an understanding of climate risks and opportunities through their own Task Force on Climate-Related Financial Disclosure reporting and net zero commitments. This tool will assist in their communication needs and in shaping improved sovereign debt analysis.
| CONSULTATION
Today, ASCOR publishes a Consultation Report which is available on www.ascorproject.org. Feedback from all relevant stakeholders, including sovereign bond issuers, development finance institutions, investors, civil society and the wider public is welcome. To submit confidential feedback, please complete this survey by 31 March 2023.
“There is an analysis dearth where investors do not have information on the climate risks and opportunities of sovereign issuers, and sovereign issuers are not clear on what information investors are seeking. This is leading to unfair extrapolations or missed investment opportunities.”
Victoria Barron, ASCOR Co-Chair and Head of Sustainable Investment, BT Pension Scheme Management said: “After an unprecedented, global collaboration between international investors, we are launching the first version of the ASCOR framework and consultation today. There is an analysis dearth where investors do not have information on the climate risks and opportunities of sovereign issuers, and sovereign issuers are not clear on what information investors are seeking. This is leading to unfair extrapolations or missed investment opportunities. By translating the complexity of climate risk assessment into clear, assessable metrics that tie to long-term economic drivers, ASCOR is putting climate change at the heart of sovereign investment decision-making.”
“The framework provides clarity about the public disclosures investors require to play their part in supporting the transition.”
Adam Matthews, ASCOR Co-Chair and Chief Responsible Investment Officer for the Church of England Pensions Board said: “Through this framework, we are putting in place a vital part of the financial architecture necessary to unlock the private finance flows governments need to achieve their national climate ambitions. The framework provides clarity about the public disclosures investors require to play their part in supporting the transition.”
| All opinions expressed are those of the author and/or quoted sources. investESG.eu is an independent and neutral platform dedicated to generating debate around ESG investing topics.
