Julien Moussavi, Senior Research Lead, Sovereign ESG & Lazar Karapandza, Senior Analyst, Sustainable Investment Research,
Investors are embracing sustainable investment strategies in passive fixed income like never before. Billions of dollars are flowing into ESG-tilted sovereign debt as asset owners try to mitigate their exposure to climate risks. But there are unintended consequences that are not discussed enough, notably related to biases present in the ESG assessment where scores tend to favour higher income countries.
In our paper ‘Dealing with income bias in sovereign ESG scores’ we propose an ex-post way to deal with income bias in Sovereign ESG.
Arne Staal, Global Head and CEO of FTSE Russell, asks Julien Moussavi, Ph.D. Senior Research Lead, Sovereign ESG, Beyond Ratings and Lazar Karapandza, Senior Analyst, Sustainable Investment Research, Beyond Ratings to summarise their research, outline its importance to our clients and provide an overview of key findings.