Ninety One, a global asset manager founded in South Africa, and WWF-UK, part of a network of the world’s largest independent conservation organisations, have launched the ‘Climate & Nature Sovereign Index’ (CNSI). The new index marks an important first step towards harnessing the potential of the ~$50tn sovereign debt market1 to support the sustainable transition. It is designed to enable investors, policymakers and other stakeholders to more robustly integrate environmental risk factors into their investment processes and capital allocation decisions, by assessing environmental risks at a country level.
The Index integrates real-time data and forward-looking projections to assess long-term climate and nature risks and opportunities for countries in developed and emerging markets. It draws upon the ever-increasing scope of spatial global datasets to assess a country’s risk in four key areas: Biodiversity and natural capital, Physical risk, Transition risk and Financial and socio-economic resilience.
For policymakers, the framework should provide the incentive to establish environmentally responsible policies in order to make foreign investment and sovereign lending more attractive. The Index should also support private and public sovereign debt investors in their engagement with countries through current markets and in the crucial post-COVID-19 recovery phase helping them transition to a more sustainable trajectory over time. In this context multi-lateral and development finance institutions also have an important role to play through offering blended financing solutions, such as subsidised coupon rates, grants or guarantees.
India, the Gulf Cooperation Council, Australia, Portugal and Greece are identified by the Index as the countries with the most to benefit from a green recovery, with enhanced sustainability policies and recovery packages likely to improve their appeal to sovereign debt investors, thereby improving their economic and fiscal resilience in the long-term.
Chile is identified as an opportunity for sustainability-minded sovereign debt investors, due to its active early issuance in green bond markets. This demonstrates the benefits of greening the economy and the opportunity for investors to contribute to the country’s sustainable future growth and economic success.
Peter Eerdmans, Head of Fixed Income, Ninety One, said: “The natural world is a foundation of every nation’s development and continued growth. In working with our clients to help understand and highlight systemic risks for economies, we are immensely proud to have worked with WWF on this ground-breaking index. We look forward to seeing the Index mobilise the scale of the sovereign debt market to invest for positive and sustainable change, future-proofing investments and helping countries make their inward investments and lending more attractive and sustainable in the long-term.”
Karen Ellis, Director of Sustainable Economy, WWF-UK, said: “In the aftermath of the pandemic, it is essential to support a green and resilient recovery, in order to safeguard countries’ future prosperity in the face of growing environmental threats. The Climate and Nature Sovereign Index can aid in catalysing ambitious action by countries on climate change and loss of nature and can also be a basis for sovereign debt investors and other stakeholders to work with countries towards this end.”
This launch is the latest development in an ongoing collaboration between WWF and Ninety One on environmental risk and sovereign debt. It leads on from the publication of the report ‘Satellites and Sustainability’ last year, which highlighted the critical role of sovereign debt investors in sustainability and the potential for geospatial data to help investors identify environmental trends at the country level, and Safeguarding Outstanding Natural Value, which considered the role institutional investors could play in protecting World Heritage sites.
About Ninety One
Ninety One is an independent, active global asset manager dedicated to delivering compelling outcomes for its clients, managing more than £118 billion in assets (as at 30.06.20).
Established in South Africa in 1991, as Investec Asset Management, the firm started offering domestic investments in an emerging market. In 2020, almost three decades of organic growth later, the firm demerged from Investec Group and became Ninety One. Today the firm offers distinctive active strategies across equities, fixed income, multi-asset and alternatives to institutions, advisors and individual investors around the world.
Ninety One established its African private equity capability in 2008. The Private Equity strategy focuses on growth capital and buyout investments in established mid-market and larger companies in Africa, with the objective of supporting the creation of local or regional champions in their respective industries.
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