About the Collaborative Sovereign Engagement on Climate Change

The PRI established the Collaborative Sovereign Engagement on Climate Change in 2022, with participating investors engaging with sovereign entities, officials and policymakers in the Australian system. In 2025, the PRI will establish additional market engagement programmes in Canada and Japan.

Through the initiative, global investors seek to engage with sovereigns on climate change issues, which present material risks and a generational opportunity for investor portfolios. In doing so, they aim to reduce risk associated with worsening global heating and maximise opportunities arising from the transition to a net-zero global economy, including where related to: 

• The value of sovereign debt investments;
• The continued competitiveness of national economies and investee companies; and 
• Systemic risks and opportunities through exposure to the global economy. 

This engagement is consistent with investors’ fiduciary duty to address climate-related risks and opportunities by supporting governments in meeting the commitments to the Paris Agreement objectives, where applicable, and ensuring a just and orderly transition to net zero. At an estimated US$60 trillion, sovereign debt accounts for a large share of global assets under management, with a growing number of investors now explicitly consider in sovereign climate performance in related investment decisions. 

Creating opportunities for dialogue between governments and investors enables sovereigns to articulate their approach to managing sustainability risks, investors to voice support for action, and both sides to gain a deeper and more common understanding of related risks and opportunities. This allows governments to more effectively create enabling economic environments for private finance through better informed decision-making on public expenditure, policy and regulation. In turn, such dialogue supports governments to accelerate their transition to net zero by crowding in private sector investment. 

Through collaboration, the initiative also aims to highlight converging and differing views in capital markets on climate change to provide sovereigns with a more holistic understanding of investor perspectives. 

How the initiative works

The initiative’s engagement activities are overseen by the Global Advisory Committee. This signatory group advises on the activities of the global initiative, including all related governance and engagement issues, and provides strategic advice to the PRI. 

Participating investors engage with sovereigns through full or preliminary engagement programmes.  

Full engagement programmes  

This is a market programme where there has been publicly communicated intent to have sustained engagements across different components of a sovereign system on a multi-year basis. (e.g. Australia and Canada).  

These will be supported by a market-specific Advisory Committee and Technical Advisory Group.  

An Investor Working Group, made up of co-lead and collaborating investors, carry out the day-to-day activities of the engagement. These may be split into thematic engagement groups focused on different parts of the sovereign system or topics. 

Preliminary engagement programmes 

These are smaller and less resource-intensive than full engagement programmes, established to understand the longer-term viability and value of the initiative to support dialogue in the market that is constructive for both PRI signatories and sovereign entities (e.g. Japan).  

These will be overseen by a joint Advisory and Working Group who will also conduct the day-to-day activities of the engagement. 

More information on the structure of the initiative and the roles and responsibilities of participating investors and advisory groups is available in the initiative’s participant terms of reference.