FTSE Russell 

Why climate change also matters for government bond investing

Henry Odogwu, Head of the asset owner group Europe at FTSE Russell discusses how European asset owners are looking to extend environmental, governance and social (ESG) considerations beyond equity into fixed income

The global sovereign debt market is one of the largest asset classes in the world, yet fixed income markets have typically lagged other asset classes in relation to ESG integration activities. Sovereign debt investors are exposed to a range of climate change risks that are typically not well understood or incorporated in the investment process. Part of the challenge has been the lack of sustainable investment products and viable climate data.

The FTSE Climate Risk-Adjusted World Government Bond Index (Climate WGBI) offers investors a solution that they can credibly implement. It measures the performance of fixed rate, local currency, investment grade sovereign bonds incorporating a tilting methodology that adjusts index weights according to each countries’ relative exposure to climate risk, with respect to resilience and preparedness to the risks of climate change.

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What’s new

  • Why climate change also matters for government bond investing

    Why climate change also matters for government bond investing

    White papersMon, 11 Nov 2019

    The global sovereign debt market is one of the largest asset classes in the world, and yet it has typically lagged other asset classes when it comes to integrating climate change considerations.

  •  No place like home: sizing up investment home bias in pension fund allocations

    Blog | No place like home: sizing up investment home bias in pension fund allocations

    White papersThu, 24 Oct 2019

    One would not expect that returns from equity investment by some of the world’s most highly-sophisticated institutional investors would be unduly domestically-focused, to the detriment of returns, but research from FTSE Russll suggests exactly that.

  • bond yields, zombies and unintended consequences

    Blog | Trapped near zero: bond yields, zombies and unintended consequences

    White papersThu, 24 Oct 2019

    When Japanese interest rates first fell towards zero, the Japanese government yield curve steepened sharply as it was assumed temporary, and that interest rates and bond yields would rapidly “normalise” or mean revert at levels more typical of the 1980s and ’90s. With about a 20-year lag, the Eurozone now appears to be experiencing the same phenomenon, and has met similar policy responses.

  • Canada, climate change & fixed income markets

    Blog | Canada, climate change & fixed income markets

    White papersThu, 24 Oct 2019

    A new FTSE Russell index measuring the impact of climate change on global fixed income markets is revealing how Canada ranks compared to other developed nations on climate readiness and provides insight into the biggest climate-related risks facing Canadian investors.

  • Appraising home bias exposure

    Appraising home bias exposure

    White papersTue, 22 Oct 2019

    Studies have shown that pension funds have inherent biases to their domestic markets within their equity allocations. In this paper, FTSE Russell seeks to understand the impact of home bias in the equity allocations of five large pension fund markets—the US, UK, Japan, Canada, and Australia—by examining the extent of their home biases and analyzing their effects over a 12-year period.

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