Sovereign debt investors are exposed to a range of climate change risks that are generally not well understood or incorporated into the investment process. Part of the challenge has been the lack of sustainable investment products and viable climate data.
Climate change risk has long been a consideration for publicly traded stocks. Today, investors can choose from a broad selection of equity products designed to avoid companies with high exposure to climate change risk.
However, when it comes to government bonds, market participants have largely overlooked the potential impacts of climate risk.
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