Assessing Sovereign Climate-Related Opportunities and Risks (ASCOR) is the first, public investor framework to assess sovereign bond issuers on climate change
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.
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.
“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.”
"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.”
“ASCOR is the first tool allowing investors and sovereign issuers to sing from the same hymn sheet on climate change. It is the fruit of a major collaborative effort which, if now sustained by broad adoption, can turn ASCOR into ‘the’ industry reference framework for sovereign debt investors and issuers. It is a unique opportunity for both audiences to coalesce around a final unified tool, thereby delivering increased consistency across sector practices.”
“The ASCOR project aims to fill a data gap on sovereign climate change, intending to provide investors with decision-useful information, whilst allowing sovereign issuers to showcase their progress. It’s been a pleasure to work collaboratively with many stakeholders globally in developing this timely and required common approach.”
“By engaging investors, sovereign issuers and academic experts, ASCOR has developed a comprehensive and valuable framework for better understanding sovereign exposure to climate risk, as we accelerate the transition to a low-carbon economy. I feel privileged to have contributed to such a much-needed endeavour.”
“Climate change analysis of sovereign bonds is a familiar and complex challenge for investors who seek to obtain consistent and reliable data across different countries and income levels. We believe the launch of ASCOR Project’s new assessment framework designed to assess sovereign bond issuers on climate change is a great step in the right direction for investors. This will enhance collaboration and improve investors’ knowledge of the climate-related risks impacting different countries which we believe will result in stronger engagement with countries to create favourable outcomes for portfolios as well as the world.”
“Sovereigns’ decisions on climate change are central for the just transition and for limiting temperature rise to 1.5°C. To make informed decisions on sovereign debt, investors require transparency and comparability on climate-related actions of sovereigns. Results of the ASCOR project deliver on this by providing information spanning from sovereigns’ NDCs and their energy policies to fairness considerations between developed and developing countries. I am deeply convinced that the results of the ASCOR project will have a significant impact on investors’ capital allocation in the mid to long-term.”
“The ASCOR Project has made considerable progress to date with the launch of today’s consultation another significant milestone. With IIGCC supporting from the start, the progress is testament to the international collaboration of asset owners, asset managers and investor networks coming together to tackle a shared challenge. Beyond the consultation, we look forward to the framework being useful to investors to assess sovereign bonds as part of their overall approach towards climate change and for those with net zero commitments.”
“The climate-related policies and practices of national governments are essential to ensuring that average global temperature rise does not exceed 1.5 degrees Celsius. Of the more than 400 investors that have made commitments to achieving net zero emissions by 2050 or sooner, many have significant investments in sovereign debt. The ASCOR framework and data tool will better enable investors and other stakeholders to assess the climate actions being taken by sovereigns. ASCOR will also provide investors with a clearer structure for engaging governments about the policies and plans for achieving their national climate goals.”
Gian Marco Candolo
Account Manager, H/Advisors Cicero