The Assessing Sovereign Climate-related Opportunities and Risk (ASCOR) project, spearheaded by BT Pension Scheme Management and the Church of England Pensions Board, on Tuesday proposed a framework to help unlock climate finance to emerging markets.
ASCOR is targeting $5 trillion to change how markets assess government bonds.
The Bond Group said the funding is focusing on fairness between richer and poorer countries. It comes amid concern that simplistic ESG analysis might penalize the nations most exposed to and least responsible for climate change.
Low- and middle-income countries are exempted from several indicators, such as the setting of a nations net-zero target by 2050 and the phasing out of combustion-engine vehicles by 2035.
Rich states, meanwhile, will be assessed on factors that include whether theyre living up to their collective commitment of $100 billion of annual climate finance for poor nations.
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This is an opportunity for countries to communicate what theyre doing and engage with interested investors who have a lot of capital, said Victoria Barron, head of sustainable investment at BT Pension Scheme, in an interview.
What we dont want is countries who arent as advanced on climate action and most vulnerable to climate-change impacts to feel like they dont have a voice at the table.
ASCOR wants to create a free voluntary tool that assesses countries on climate change and serves as an industry standard for net zero-aligned sovereign investing.
It says its proposals, developed with the Transition Pathway Initiative and under public consultation until March 31, will benefit both issuers and investors by making it easier for countries to demonstrate their climate progress over time.
The aim is for every sovereign-debt-issuing country to be assessed against a framework that will analyze emission pathways, climate-policy action, and opportunities to finance the transition. The latter is critical given that many countries facing the greatest climate risks currently have insufficient access to financing, ASCOR said.
