ESG scoring for sovereign bond issuers – Here’s how we do it

A new handbook from BNP Paribas Asset Management (BNPP AM) explains how we identify the best sovereign bond issuers in terms of their environmental, social and governance (ESG) performance.  

Our comprehensive methodology is applied across 109 developed and emerging countries that make up our sovereign bond investment universe.

The ESG quantitative scoring method, developed by BNPP AM’s Sustainability Centre, enables our specialists to compare countries with different levels of economic development and varying degrees of commitment to mitigating the risks of climate change.

It covers 225 key performance indicators within 14 environmental, 12 social, and seven governance themes to provide an in-depth view of each country’s sustainability credentials.

In addition to purely quantitative analysis, we may include a detailed qualitative overlay and embark on a dialogue with the country to better inform the eventual ESG score for the sovereign issuer.

These inputs provide us with the tools we need for better-grounded decision-making when selecting sovereign bond issuers.

Important information

Please note that articles may contain technical language. For this reason, they may not be suitable for readers without professional investment experience. Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. This document does not constitute investment advice. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns. Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions). Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.

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