Blog | The impact of worst-case climate change on sovereign debt

Sovereign bonds investors need to consider risks from the impact of climate change into their allocation decisions. Climate change implies two main categories of risks for financial stakeholders: the risks from physical impacts and transitioning to a carbon-neutral economy.

A clear understanding of these risks is important to reallocate financial resources in a manner that is consistent with the Paris Agreement objectives. The latter seek to limit the likelihood of capital being destroyed by climate damages and investments turning into “stranded assets.”

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