Investors could soon have a tool for assessing sovereign climate risk

What is sovereign climate risk and how is it measured? This is the focus of a progress report by the ASCOR (Assessing Sovereign Climate-related Opportunities and Risks) project. The ASCOR project was intended to be a response to investor demands for an analytical framework that they could use to assess how a government plans to transition and what the possible risks of the plan are. The project was launched in June 2021 and was tasked with developing a sovereign climate risk assessment framework. According to the progress report, the project is in its third stage, which involves looking at all possible indicators, such as emissions alignment, mitigation policies, adaption policies and funding gaps. Information gathered from such indicators could help investors gauge the ability and willingness of a government to successfully deliver a transition. Stage 3 should be completed by the end of this year, by which time an initial set of metrics and indicators should have been identified.