Goldman Sachs Asset Management has selected Sovereign Climate Risk Scores powered by Moody’s affiliate Four Twenty Seven for use in its ESG evaluation of sovereign risk.
This dataset offers a detailed view of the future exposure of the global population, the economy, and agriculture to a range of physical climate hazards.
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The impact of climate factors, including increased temperatures, drought, rising sea levels, and more extreme weather events, are expected to increase over time. Goldman will use the dataset as an input to its own proprietary Sovereign ESG framework.
The firm will combine the assessment of climate risk exposure with qualitative analysis by its investment teams on countries’ capacities to adapt to physical risks.
Goldman Sachs Asset Management executive director Prakriti Sofat said: “Sovereign bonds are an integral part of our fixed income portfolios, but intrinsic uncertainties make it challenging to quantify the long-term impact of climate change on countries.
“Using this dataset will help us assess this evolving risk and reflect it in our investment decisions,” Sofat added.
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By GlobalDataLaunched in December, the Sovereign Climate Risk Scores are claimed to be the only known dataset matching physical climate risk exposure to population location, GDP and agricultural areas within countries.
It also provides detailed metrics including both percent exposed and total amount exposed to each climate hazard.
Emilie Mazzacurati, global head of Moody’s Climate Solutions in Moody’s ESG Solutions Group, said: “Understanding exposure to physical climate hazards is critical for investors and credit institutions in order to price climate risk, and also to help direct finance flows towards adaptation and resilience where they’re most needed.
“We’re extremely pleased that Goldman Sachs has chosen to use our new dataset to enhance its ESG evaluation of sovereign risk.”
In 2018, UK-based online investment platform Wealthify selected Moody’s Analytics Wealth Scenario Generator (WSG) to support investment decision making processes for clients.
