An article published in L’AGEFI on 17 July 2026 highlights the launch of Scientific Climate Ratings’ Sovereign Climate Risk Ratings, a new framework designed to assess the future macroeconomic impact of physical climate risk on sovereign economies.

The piece explains how climate change has become a key risk factor for financial markets, while existing tools remain limited in measuring its impact on countries’ long-term economic resilience. Developed by Scientific Climate Ratings, an initiative from the EDHEC Business School ecosystem, the new ratings aim to provide investors, asset managers and banks with a standardised measure of expected economic losses resulting from rising temperatures.

The analysis features insights from Rémy Estran-Fraioli, CEO of Scientific Climate Ratings, who explains the importance of connecting climate impacts at the regional level with sovereign-level financial risk. As he puts it, climate change is a global phenomenon, but climate risk is ultimately local and financial. The methodology therefore captures structural and cumulative production losses at the regional level before aggregating them into sovereign impacts.

The article highlights several key features of the methodology:

• High-resolution regional analysis, covering 191 countries and more than 3,400 subnational regions representing over 95% of global economic output.
• Bottom-up economic modelling, estimating climate impacts first at the regional level before aggregating them into sovereign-level impacts, thereby capturing differences in temperature, productivity and population distribution within countries.
• A four-step methodology linking historical climate and regional economic growth, projecting future physical climate damages, modelling their relationship with global temperature pathways, and applying probabilistic climate scenarios to calculate expected economic losses.
• Standardised sovereign ratings, with countries assessed on a scale from A to G, with G representing the highest level of exposure to physical climate risk.

The report uses the United States to illustrate the importance of subnational analysis. While a national average temperature could suggest that the country remains close to an economic productivity optimum, the regional approach captures the greater exposure of highly populated southern and southwestern states such as Arizona, Texas and Florida. The analysis projects a 4.6% decline in GDP per capita by 2035 and 10.4% by 2050, resulting in a rating of E for the United States in 2035.

The article also highlights the contrasting exposure of different economies. Russia and parts of Europe appear less affected because their cooler climates mean that moderate warming has a smaller negative impact on economic productivity, while countries such as Brazil and India face greater losses as temperatures already exceed levels considered optimal for economic activity.

Nicolas Schneider, economist at the EDHEC Climate Institute, further emphasises the longer-term economic implications of chronic climate risk, noting that climate impacts increasingly affect countries’ productivity and reduce their growth potential.

Read the full article here (in French 🇫🇷).