The 800 pound gorillas of sustainable finance
States are the key stakeholders in shaping sustainable development pathways for national economies. They drive international negotiations on Trade, Environment, Peace, Labor and Human rights. They define national regulations as well as fiscal pressure and incentives. Last but not least, they are setting the pace for investments in sustainable development infrastructures, as a direct investor or a guarantor. A study by the UN Sustainable Development Solutions Network has shown that Low and Medium income countries would need to invest annually four percent of their GDP until 2030 to reach Sustainable Development, three quarter of which would have to be financed by the public sector.
The assessment of Environmental, Social and Governance performance of Sovereign debt issuers appears therefore to be a must. It should be part of the fiduciary duty of investors, and a way to send a clear market signal to governments that long term investors, Pension Funds, Insurance Companies and their beneficiaries, do care about the future. This requirement is even more pregnant in the frame of the soaring new Green and Social bonds markets, that Sovereign have just entered, as the ESG performance of the issuance will be deemed as important as that of the issuer. (…)