Ninety One and WWF partner for climate debt index

Index will harness the potential of the $50trn sovereign debt market to support countries in their sustainable transition

Ninety One and WWF have launched an index that is hoped will incentivise policymakers to establish environmentally responsible policies, and make foreign investment and sovereign lending more attractive

The organisations have teamed up to launch the Climate & Nature Sovereign Index’ (CNSI), saying it will harness the potential of the $50trn sovereign debt market to support countries in their sustainable transition.

Peter Eerdmans (pictured), head of fixed income at Ninety One, explained: “The natural world is a foundation of every nation’s development and continued growth. In working with our clients to help understand and highlight systemic risks for economies, we are immensely proud to have worked with WWF on this ground-breaking index.

“We look forward to seeing the Index mobilise the scale of the sovereign debt market to invest for positive and sustainable change, future-proofing investments and helping countries make their inward investments and lending more attractive and sustainable in the long-term.”

The groups said the index will measure environmental risk in emerging market and developed market debt at an individual country level, and is designed to enable investors, policymakers and other stakeholders to more robustly integrate environmental risk factors into their investment processes and capital allocation decisions, by assessing risks at a country level.

By integrating real-time data and forward-looking projections, the index assesses long-term climate and nature risks and opportunities for countries in developed and emerging markets. It draws upon global datasets to assess a country’s risk in four key areas: biodiversity and natural capital, physical risk, transition risk, and financial and socio-economic resilience.

India, the Gulf Cooperation Council, Australia, Portugal and Greece have been identified by the Index as the countries with the most to benefit from a green recovery, with enhanced sustainability policies and recovery packages likely to improve their appeal to sovereign debt investors, the groups said, and thereby raising their economic and fiscal resilience over the long term.

Meanwhile, Chile was identified as an opportunity due to its active early issuance in green bond markets.

As well as making environmentally responsible polices more attractive to foreign investors, the groups said the index should also support private and public sovereign debt investors in their engagement with countries through current markets. In addition, in the crucial post-Covid-19 recovery phase, it should help them transition to a more sustainable trajectory over time.

Karen Ellis, director of sustainable economy at WWF-UK, said: “In the aftermath of the pandemic, it is essential to support a green and resilient recovery, in order to safeguard countries’ future prosperity in the face of growing environmental threats. The Climate and Nature Sovereign Index can aid in catalysing ambitious action by countries on climate change and loss of nature and can also be a basis for sovereign debt investors and other stakeholders to work with countries towards this end.”

The index launch is part of an ongoing collaboration between Ninety One and WWF, and follows the publication of the report Satellites and Sustainability last year, which highlighted the critical role of sovereign debt investors in sustainability.

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Natalie Kenway

Natalie is global head of ESG insight for ESG Clarity and has been an investment journalist for 16 years. She won Editor of the Year at the Aviva Investors Sustainability Media Awards 2021, and was Winner...