Sovereign debt

Traditionally considered to be a risk-free asset class, sovereign debt has been subject to less ESG consideration than other fixed income instruments. However, there is growing appreciation that a more explicit and systematic consideration of ESG factors can enhance risk assessments of government bonds and help drive change towards more sustainable growth models.

The resources below can facilitate the incorporation of ESG factors in sovereign debt analysis and inform engagement on ESG topics with sovereigns and other country stakeholders. The PRI would like to thank the advisory committee for its support. Contact us if you have questions.

Latest report

  • Sovereign debt workshop_hero

    Bringing together sovereign debt investors and index providers

    Investors in sovereign debt met with six index providers to discuss opportunities, and challenges, in creating ESG indexes for the asset class. This workshop summary includes ideas and insights from both groups.

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    Human rights in sovereign debt: the role of investors

    Investors in sovereign debt have less leverage on human rights issues than investors in equities or corporates. But they are not powerless. In this report, we outline three steps sovereign investors can take when considering human rights issues in their investment decisions and we propose a range of responses.

  • ESGengagementSovDebt

    ESG engagement for sovereign debt investors

    How existing communication channels can be leveraged to stimulate conversations around ESG topics through a multi-pronged process, which can be mutually beneficial for sovereigns and investors (2020).

ASCOR Project

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ASCOR Project

The ASCOR – Assessing Sovereign Climate-related Opportunities and Risks- Project has been established to create a tool giving investors a common understanding of sovereign exposure to climate risk and of how governments plan to transition to a low-carbon economy.

Blog

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It’s time for sovereign bondholders to be more vocal on ESG topics

2020-11-10T10:18:00+00:00

Engagement on ESG issues is an underutilised practice among sovereign bondholders, and this needs to change. Bondholders can play an important role in driving change and shaping ESG outcomes through their investment decisions.

Practical guides

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    A practical guide to ESG integration in sovereign debt

    Designed to help signatories integrate ESG factors into research, analysis and the construction of sovereign debt portfolios, this guide includes lists of data sources, practitioner case studies and a comparison of ESG incorporation techniques (2019).

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    Integrating ESG factors into sovereign issuer analysis

    Based on discussions and presentations with the PRI fixed income sovereign working group, this report is a primer that provides an initial conceptual framework exploring ESG issues that might be material to sovereign bond risk assessments and pricing (2014).

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    Sovereign bonds: spotlight on ESG risks

    Drawing on information disclosed through the PRI’s reporting data and interviews to its signatories this document represents one of the first attempts to show how ESG factors can be material to the creditworthiness and investment performance of sovereign bonds (2013).