Challenges featured the launch of Scientific Climate Ratings’ Sovereign Climate Risk Ratings, exploring how rising temperatures are expected to reshape the long-term economic outlook of countries across the G20 (eg. Saudi Arabia and the United States who are highly exposed).

Drawing on research from the EDHEC Climate Institute and Scientific Climate Ratings, the article explains how the new framework measures the macroeconomic impact of chronic physical climate risk by projecting changes in GDP per capita across 191 countries and more than 3,400 subnational regions.

Key insights from the article include:

• Country-level climate risk ratings from A to G, translating expected climate impacts into an intuitive measure of sovereign exposure.
• Subnational economic modelling, capturing regional differences in productivity and climate exposure to produce more accurate national assessments.
• Forward-looking projections for 2035 and 2050, showing how chronic warming is expected to affect long-term economic performance across sovereign economies.
• Practical applications for financial institutions and governments, supporting stress testing, sovereign bond analysis and the prioritisation of climate adaptation investments.

The article highlights how Sovereign Climate Risk Ratings provide investors, banks and policymakers with a science-based framework for assessing sovereign climate risk and incorporating long-term physical climate impacts into financial decision-making.

Read the full article here.