Verisk Maplecroft has launched a new sovereign environmental, social and governance ratings to provide investors with a comprehensive picture of ESG risks and opportunities across the entire current and potential sovereign issuer universe.
The ratings, which extend Verisk Maplecroft’s growing presence as a geospatial ESG data provider, offers a set of signals for tracking the sustainability factors that matter most for sovereign debt markets – from both ethical and material perspectives.
For example. research into the data’s relationship with bond spreads shows that human rights are, in reality, highly material, and that risks relating to the energy transition have now become a key factor affecting countries’ borrowing costs.
The company said that setting a new global standard for sovereign ESG analysis will enable more widespread incorporation of ESG in government debt markets, helping investors to price in sustainability factors more effectively and create portfolios that tightly align with their values.
The product which features six years of quarterly historical data, draw on approximately 350 of Verisk Maplecroft’s 1200 plus indicators across 37 separate issues and nine ESG dimensions.
The methodology, based on cluster analysis, captures the non-linear complexity of the sovereign ESG world more effectively than traditional weighted averages.
“With access to Verisk Maplecroft’s sovereign ESG ratings, investors of all types will be better positioned to anticipate how changes in a sovereign’s ESG risk profile can impact debt pricing,” says James Lockhart Smith, head of markets at the company.
He adds, “Users can track how a country’s sustainability performance is evolving and watch for approaching ESG tipping points to help minimise downside risks and identify emerging investment opportunities.”
The sovereign ESG ratngs build upon Verisk’s growing suite of sustainability and resilience exposure analytics, which include extreme event models and global geospatial datasets covering the full spectrum of ESG, political and energy transition risks.
©Markets Media Europe 2022
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