ISS Sustainability Solutions, the sustainable investment arm of ISS STOXX, has launched a new Sovereign Climate Impact Report, designed to help institutional investors assess climate risks and impacts associated with sovereign and sub-sovereign bond portfolios.
The new report expands ISS’s existing suite of climate solutions, which previously focused on corporate issuers. It incorporates over 180 current and forward-looking metrics, aligning with the Partnership for Carbon Accounting Financials (PCAF) methodology and guidance. The report aims to support investors, banks, and insurers in meeting climate disclosure requirements and risk management obligations.
The tool offers carbon footprinting, climate transition risk analysis, scenario alignment, and policy insights for sovereign entities. It includes data on Land Use, Land-Use Change, and Forestry (LULUCF) emissions, fossil fuel dependency, energy mix, and subsidy information. Emissions intensity data are presented alongside PCAF quality scores for transparency.
Scenario alignment is assessed using pathways from the Network for Greening the Financial System (NGFS), comparing sovereign portfolios against Net Zero targets for 2050. Portfolio-level assessments feature heat maps and implied temperature rise metrics, and the report is accessible via ISS’s DataDesk platform or through data feeds and APIs.
The release supports compliance with global climate reporting frameworks such as the IFRS S2 standards from the International Sustainability Standards Board (ISSB), the Task Force on Climate-related Financial Disclosures (TCFD), and regulatory requirements including SFDR, CSRD, and frameworks in the UK, Australia, and New Zealand.
Till Jung, Head of Sustainability Business at ISS STOXX, said the launch marks a step forward in climate impact analysis for sovereign investments, with further developments anticipated in 2025.
