Demystifying Sovereign ESG
The evolution of sustainable finance to mainstream finance has been motivated by a growing demand for the financial sector to play a greater role in the transformation of the current economic model into a more sustainable one. The introduction of t...
| Main Authors: | , , |
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| Format: | Report |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/842671621238316887/Demystifying-Sovereign-ESG http://hdl.handle.net/10986/35586 |
| Summary: | The evolution of sustainable finance to
mainstream finance has been motivated by a growing demand
for the financial sector to play a greater role in the
transformation of the current economic model into a more
sustainable one. The introduction of the United Nation’s
(UN) Sustainable Development Goals and the Paris Agreement
on climate change in 2015 have helped galvanize a societal
shift to ensure a sustainable future and to fight climate
change in particular. As a result, the pace of
environmental, social, and governance (ESG) integration,
which has become the most prevalent form of sustainable
finance, has accelerated in recent years. Market
participants continue to grapple with adapting the ESG
framework to the sovereign context, despite significant
progress of ESG integration in the corporate bond and equity
asset class. This challenge is due to the multifaceted
nature of ESG-related issues facing governments in relation
to corporate entities, as well as a more complex
transmission mechanism of the sovereign debt asset class to
sustainable outcomes in the real economy. This paper
demystifies sovereign ESG as a distinct segment of the ESG
sector by assessing the major sovereign ESG providers that
have laid the foundation for the operationalization of ESG
investing in sovereign fixed income markets. |
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