Aktia Pankki Oyj : is the only Finnish asset manager involved in developing a global framework for assessing sovereign debt issuers on climate change

Aktia is the only asset manager in Finland involved in developing a global framework suitable for the international financial sector to assess sovereign debt issuers on climate change. The tool incorporates financially material climate change information and is useful when assessing sovereign bond investments.

"Aktia was welcomed to the collaboration, called ASCOR, because of our long experience in integrating ESG criteria in the model we use to identify investable countries within our sovereign investment process. Our successful EMD strategies are based on this model," says Markus Lindqvist, Director of Sustainability at Aktia.

The first, public investor framework

Assessing Sovereign Climate-Related Opportunities and Risks (ASCOR) is the first, public investor framework to assess sovereign bond issuers on climate change. ASCOR has been a collaboration by asset owners and asset managers, supported by international investor networks, to incorporate financially material climate change information when assessing sovereign bond investments.

"The final framework will result in an independent, freely and publicly available assessment tool intended to support sovereign debt issuers to accelerate climate action and for investors to achieve their net zero goals," explains Lindqvist.

The framework helps investors engage with issuers to find a common understanding of the transition at a national level, as well as giving the opportunity to sovereigns to showcase their progress in addressing climate change.

Supporting a fair and just low-carbon transition

ASCOR has woven the principles of fairness into the framework with the aim of encouraging financial flows to support a resilient and just low-carbon transition, especially in countries that are least able to finance it themselves. The framework sets out a common basis to assess individual country climate change approaches and will reinforce public disclosures to aid investors to understand their action and progress. It builds on existing data but will also further enable issuers to detail material information, so that investors can more effectively support country transition plans.

For example, the framework will focus on country sustainable finance plans, policies and transition requirements both in terms of mitigating climate change as well as building resilience to climate impacts. Investors are being increasingly required by many regulators to demonstrate an understanding of climate risks and opportunities through their own Task Force on Climate-Related Financial Disclosure reporting and net zero commitments. This tool will assist in their communication needs and in shaping improved sovereign debt analysis.

Supporting investors achieve net zero goals

The final framework will result in an independent, freely and publicly available assessment tool intended to support investors achieve their net zero goals; help them engaging with issuers to find a common understanding of the transition at a national level, as well as giving the opportunity to sovereigns to showcase their progress in addressing climate change.

The ASCOR Project is led by asset owners, asset managers and investor networks. ASCOR is co-chaired by Victoria Barron, BT Pension Scheme Management, and Adam Matthews, Church of England Pensions Board. ASCOR was established with the UN-convened Net-Zero Asset Owner Alliance (AOA), Ceres, the Institutional Investors Group on Climate Change (IIGCC), the Principles for Responsible Investment (PRI), and Sura Asset Management, who are all part of ASCOR's Steering Committee. The project is supported by Chronos Sustainability. ASCOR's academic partner is the TPI Global Climate Transition Centre, based at the Grantham Research Institute on Climate Change and the Environment, LSE.

The ASCOR Advisory Committee, who are among the funders and technical contributors of the current stage of the project, is composed of the Steering Committee members and investment representatives from Aktia Bank, Allspring Global Investments, Amundi Asset Management, Colchester Global Investors, Franklin Templeton, MFS Investment Management, and Ninety One.

Additional partners to the project include the investor networks Investor Group on Climate Change (IGCC) and Asia Investor Group on Climate Change (AIGCC).More information: www.ascorproject.org