ISS Sustainability Solutions, part of ISS STOXX, has introduced the Sovereign Climate Impact Report. This new tool is designed to help investors analyse, measure, and address climate transition risks and impacts associated with their sovereign portfolios. The launch responds to a market need for a sovereign-focused counterpart to the existing corporate issuer-focused Climate Impact Report, which offers detailed insights into Scope 1, 2, and 3 emissions, as well as transition and physical risks, and climate scenario analysis.
The Sovereign Climate Impact Report integrates over 180 current and forward-looking metrics and covers areas such as carbon footprinting, transition analysis, scenario alignment, and climate policy. It also aids investors in complying with climate-related disclosure requirements in line with standards and regulations like ISSB, TCFD, CSRD, and SFDR.
The report includes a transition risk analysis that examines the energy profiles of sovereigns, considering factors such as fossil fuel reserves, dependency, subsidies, and energy mix. This analysis is compared against the Net Zero scenario outlined by the International Energy Agency (IEA). Furthermore, it provides portfolio scenario alignment with net zero emissions by 2050, using climate scenarios from the Network for Greening the Financial System (NGFS).
ISS notes that the solution aligns with the latest Partnership for Carbon Accounting Financials (PCAF) methodology, offering an emissions PCAF quality score for enhanced transparency. Till Jung, Head of Sustainability Business at ISS STOXX, expressed satisfaction with the launch, highlighting it as a key addition to their suite of climate solutions, with further innovations expected in 2025.
