Addressing mispricing in sovereign climate risk assessments

Overview

The upcoming webinar, hosted by the EDHEC Climate Institute, will delve into the critical issue of mispricing in sovereign climate risk assessments. As climate change increasingly impacts national economies and long-term GDP growth, the absence of chronic physical climate risks from sovereign bond spreads poses significant challenges for investors and asset managers. This disconnect can lead to misallocated capital and difficulties in meeting regulatory expectations regarding climate risk assessment and disclosure.

Key Insights

Participants will gain insights into the innovative Sovereign Climate Ratings developed by Scientific Climate Ratings, a venture of EDHEC Business School. These ratings offer a detailed assessment of climate-related sovereign risk, utilizing a probabilistic framework aligned with the Network for Greening the Financial System (NGFS) scenarios. The methodology captures within-country heterogeneity and long-term physical climate risk exposure, providing unprecedented detail for investors.

Learning Objectives

During the webinar, attendees will:

• Understand the reasons behind the underpricing of physical climate risks in sovereign markets.
• Discover the scientific methodology behind the Sovereign Climate Ratings.
• Explore key findings from recent research on climate risk.
• Learn how to identify structural economic vulnerabilities before they are reflected in sovereign spreads.
• Gain practical insights into climate-adjusted sovereign risk assessments for portfolio construction and risk management.

Speakers

The session will feature experts including Nicolas Schneider, Senior Research Engineer and Macroeconomist at the EDHEC Climate Institute, and Thibaud Barnaud, Climate Risk Manager at Scientific Climate Risk Ratings. The discussion will be moderated by Stella Farrington, Head of Content at Energy Risk, bringing a wealth of experience in financial journalism and energy markets.

For more information and to register, visit the EDHEC Climate Institute event page.