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ASCOR Flags Sovereigns’ “Lack of Ambition”

The Assessing Sovereign Climate-related Opportunities and Risks (ASCOR) project’s first assessments of 25 countries’ climate risks for sovereign bond holders has found a “mixed picture”. The investor-led project said there was “significant progress on framework climate laws but a “lack of ambition” in targets for 1.5°C pathway alignment and a growing emission gap. While the majority of assessed countries had set an emission reduction target, few align with a pathway that limits global temperature rise to 1.5°C. Just four of the assessed countries have emission reduction targets aligned with a 1.5°C pathway when historical emissions, income and population are factored in. The tool also found an implementation gap with insufficient policies, particularly at a sector level, to meet emission reduction targets. Although their US$100 billion climate finance commitment may finally be met in 2023, most assessed high-income countries need to increase their share of contributions. Over the past five years. ASCOR found emissions have decreased in 14 countries, while 13 have passed legislation to enshrine an effective climate change response in law. Eleven of these laws involve accountability elements and additional climate laws are expected to be passed in South Africa, Thailand and Morocco. The 25 countries assessed represent nearly 70% of global greenhouse gas emissions and 50-80% of the main sovereign bond market indices. The project plans to further expand country coverage, eventually covering more than 100. Last month, ASCOR updated its assessment framework including a revamp of its third pillar to add climate spending initiative.

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