Beyond Disclosure: Managing Sovereign Climate Risk
Investors and regulators around the world are increasingly looking to understand how climate change could cause financial and economic harm. They are most concerned about the systemic financial risks associated with large-scale investments being held in assets which will be impacted by the climate crisis and its concomitant economic transitions. However, to date, the steps taken by industry groups and government to manage climate risks have focused on information disclosure from corporate actors (such as the Taskforce for Climate-related Financial Disclosure - TCFD). The logic of these initiatives is to create greater transparency and to enable capital markets to ‘price-in’ climate risks.
But corporations are only one type of actor involved in investment markets. Governments have borrowed money for centuries from private and public lenders. Indeed, government debt is at historically high levels at present. How should investors, regulators and governments themselves manage climate risks associated with such sovereign lending? To date, investors and governments have been emphasising disclosure as a mechanism for managing sovereign climate risk. But governments are structurally different to corporate entities, and many of the risks they face cannot be managed by disclosure itself. Indeed, disclosure may lead to significant ethical implications for countries. If not disclosure, what other approaches could sovereigns, investors and regulators take to manage such risks? In this talk we elaborate why sovereign climate risk is important and set out an initial framework for moving beyond disclosure in managing sovereign climate risk.
This event has been organised with the financial support of the European Union’s Partnership Instrument. The opinions expressed are the sole responsibility of the speakers and do not necessarily reflect the views of the European Union.
Arjuna (‘Arj‘) is a Director a Pollination and is an expert on various aspects of climate policy, law and finance. Over the past decade, he has advised governments, international financial institutions and global corporations on the development and implementation of climate policy and legal frameworks, climate risk management, climate finance instruments and energy decarbonization strategies.
Arj began his career as a lawyer at Baker McKenzie’s Global Climate Change Practice, during which time he was recognised as Australia’s best lawyer under 30. He was also previously a Senior Policy Adviser at the Centre for Policy Development and a Fellow at the Steyer Taylor Center for Energy Policy and Finance at Stanford University. On the side of his role at Pollination, Arj is an Honorary Research Associate at the University of Oxford’s Smith School for Enterprise and Environment and a Board Director at Environmental Justice Australia.
Arj has a doctorate in climate law and economics from Stanford University which he received as a John Monash Scholar, and degrees in Law and Asian Studies from the Australian National University. His work has been published in leading peer-reviewed climate change journals and in the international press.
Zoe is an Executive Director at Pollination and is a leading advisor on climate finance, with significant experience developing strategy, governance and analytics for institutional investors wishing to manage climate change risk and SDG exposure.
She previously led Citi’s APAC ESG Research team and advised investors on climate change at Credit Suisse and Bank of American Merrill Lynch. She serves on the board of the IGCC and was an observer to the Australian Sustainable Finance Initiative’s Coordinating Working Group and is on the board at the Centre for Policy Development.
Zoe has won numerous research awards, was rated one of the top RI analysts globally in 2019 and was awarded the inaugural Rising Star award by WIBF. She holds master’s degrees in environmental policy and economics from Oxford University and the University of Queensland.