Virtual Roundtable: Rising Temperatures, Falling Ratings: The Effect of Climate Change on Sovereign Creditworthiness

Enthusiasm for ‘greening the financial system’ is welcome, but a fundamental challenge remains: financial decision makers lack the necessary information. It is not enough to know that climate change is bad.

Markets need credible, digestible indicators that translate climate science into material risks. Join this discussion to learn more about the ground-breaking research to produce the world’s first-ever climate-adjusted sovereign credit rating, bridging the gap between climate science and real-world financial indicators.

Led by Cambridge University and supported by LetterOne, this research initiative simulated the effects of climate change on sovereign ratings for 108 countries, and showed that climate-induced sovereign downgrades may begin as early as 2030, increasing in intensity and across more countries over the century. Insights from this will allow the financial community to understand the impact of long-term climate effects on sovereign and corporate debt.