Chief Investment Strategy Officer @ SDG Impact Japan | Economics, Business, Asset Management
A great Tuesday morning! What a day! If you don’t know what " climate-sovereign debt doom loop" is, then this is a post for you! Not one country is on track for a 1.5C future based on 2030 national pledges for cutting emissions, according to the Assessing Sovereign Climate-related Opportunities and Risks Project. Climate risks increase the cost of debt, making debt servicing more difficult. At the same time, climate-related damages reduce fiscal space, making it difficult to secure debt financing for mitigation or adaptation policies to reduce climate risks. A doom loop emerges, with low-income countries particularly vulnerable. What’s more, the review of 70 countries’ emissions and policies shows “no overwhelming trend” that wealthier countries are doing a better job of tackling climate change. Investors largely agree that climate risks aren’t fully priced into markets, and academics are now studying what they’re calling the climate-sovereign debt doom loop to calculate the potential costs to countries. The 70 targeted for review make up 100% of the three main sovereign debt bond market indexes, according to the report. The report’s authors concluded that more than 80% of wealthy countries aren’t contributing their proportional share of an annual $100 billion international climate finance goal, which was increased to $300 billion at the COP29 climate summit in Baku. Have a great debt doom loop Tuesday! https://lnkd.in/dZ7nrNRY
