Dealing with income bias in sovereign ESG scores - Sovereign ESG revisited

Although the use of sustainability metrics in sovereign fixed income markets is becoming more mainstream, there is a lack of consensus on how to appropriately assess countries’ environmental, social and governance performance.

Using a simple statistical framework and our proprietary Sovereign Risk Monitor (SRM) methodology, we estimate a log-linear relationship between the income level of economies and their respective E, S and G performance assessment.  

Read this paper to learn why:

  • The income bias is most pronounced for G scores, but is weaker for S and particularly E scores.
  • The existing dichotomy between high-income (OECD and non-OECD) economies is amplified after adjusting for the income bias;
  • Low-income economies score higher after taking into account the income bias, in each of the E, S or G pillars.

Read the full whitepaper now at the link below