Part 3: Anticipating climate change risks on sovereign bonds

Focusing on two specific climate hazards: (i) the average temperature and (ii) the frequency of very hot days, this study illustrates how climate change could materialize should no further mitigation efforts be implemented and explores the quantifying of financial risk from climate change for sovereign issuers.

Three main findings:

• Learn which countries are most vulnerable to climate change, and which countries have a high default risk due particularly to their lower fiscal capacities;
• Find out how soon financial instability in the sovereign market from unmitigated climate change might be seen;
• Understand how even a Paris-aligned scenario will lead certain regions and countries to still be exposed to significant physical risks. 

To read the full research paper click here.

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