Sovereign bonds have remained largely unexamined from a carbon risk and reporting perspective due to lack of appropriate metrics and actionable insight, but as one of the largest asset allocations by pension funds should be a focus for climate risk analysis.
Key questions covered in this paper include:
- How should Sovereign carbon emissions be allocated? What different forms of accounting are available to investors?
- What denominators are available, and when should they be used?
- How can investors take account of apportioning, portfolio aggregation and the debt bias?