Sustainability and EMD: Tackling environmental risks

In the first of our EM Debt: in discussion series, we introduce our new Climate and Nature Sovereign Index – a framework that makes environmental risks clear and comparable and that could help steer capital to where it is needed most.

The fast view

• The natural world — the foundation of every nation’s development and continued growth — is in steep decline, creating systemic risks for economies globally.
• How a country manages natural assets is significant for its future sustainability and growth prospects; sovereign debt investors need a clear assessment of this and associated risks.
• To this end, WWF and Ninety One have developed a Climate and Nature Sovereign Index (CNSI).
• The CNSI incorporates real-time data and forward-looking projections; thanks to ongoing work in geospatial modelling and remote sensing these are now obtainable.
• The CNSI is not only a measure of risk; it should also help identify the opportunities to allocate capital to where it is most needed. But to achieve this, it must be complemented with new financing mechanisms.

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General risks

All investments carry the risk of capital loss. The value of investments, and any income generated from them, can fall as well as rise and will be affected by changes in interest rates, currency fluctuations, general market conditions and other political, social and economic developments, as well as by specific matters relating to the assets in which the investment strategy invests. If any currency differs from the investor’s home currency, returns may increase or decrease as a result of currency fluctuations.