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This paper evaluates the progression of the sovereign ESG landscape since the initial comprehensive assessment of the sector in 2021 in “Demystifying Sovereign ESG” by conducting a comparative analysis of the current sovereign ESG methodologies of commercial ESG providers. The 2021 study articulated the distinct nature of the sovereign ESG segment from corporate ESG and documented fundamental shortcomings in sovereign ESG methodologies, such as the “ingrained income bias”, lack of consensus on environmental performance, and conflation of risk and sustainability objectives. While sovereign ESG methodologies have evolved since 2021, the significant correlation across providers of aggregate, S, and G scores persist. In response to market demand there has been a notable shift towards greater focus on the E pillar against growing heterogeneity on climate and environmental considerations across ESG providers. The findings underscore the disparity between perceptions and realities in implementing a sustainability strategy within the sovereign debt asset class. This necessitates a reevaluation of sovereign ESG scoring methodologies towards outcome-based metrics and urges a globally coordinated effort to establish robust sustainability measurement frameworks.

Aggregate Factor Income Distribution --- Brokerage --- Climate finance --- Climatic changes --- Conservation of the environment --- Corporate Culture --- Corporate Governance --- Corporate governance --- Corporate social responsibility --- Currency crises --- Debt Management --- Debt --- Debts, Public --- Diversity --- Economic & financial crises & disasters --- Economic sectors --- Economics of specific sectors --- Economics --- Economics: General --- Environment and Development --- Environment and Trade --- Environment --- Environmental Accounts and Accounting --- Environmental Conservation and Protection --- Environmental Economics --- Environmental Economics: General --- Environmental Equity --- Environmental sustainability --- Financial Instruments --- Green finance / sustainable finance --- Income --- Informal sector --- Institutional Investors --- Investment Banking --- Macroeconomics --- National accounts --- Non-bank Financial Institutions --- Pension Funds --- Population Growth --- Public debt --- Public finance & taxation --- Public Finance --- Ratings and Ratings Agencies --- Role & responsibilities of boards & directors --- Social Responsibility --- Sovereign Debt --- Sustainability --- Sustainable development --- Venture Capital

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The increasing role of the financial sector in the move toward a more sustainable economic model continues apace. The Coronavirus (COVID-19) shock shone a light on the need for all society to correct course, and the financial sector is responding. The pace of environmental, social, and governance (ESG) integration into investment decisions, which has become the prevalent form of sustainable finance, continues to accelerate. These developments reflect changing societal perspectives that challenge the traditionally ingrained investment approaches that have evolved over many decades. Against this backdrop, various financial sector stakeholders continue to evaluate how their role, products, and tools should adapt to this evolving landscape. This paper focuses on sovereign credit ratings and empirically assesses how broad sovereign ESG factors as well as the ESG factors specific to a country's national wealth and management of risks and opportunities related to so-called stranded assets like fossil fuel resources are manifested in sovereign credit rating assessments.

Adaptation To Climate Change --- Carbon Policy and Trading --- Creditworthiness --- Debt Markets --- Environment --- Finance and Financial Sector Development --- Sovereign Debt

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Environmental, social, and governance (ESG) investing is quickly becoming ordre du jour in sovereign debt investing. There remains, however, lack of clarity around frameworks for scoring sovereign ESG performance, industry practices, and the definition of sustainability itself. This World Bank publication consists of two independent reports. The first part is written by the World Bank and takes stock of the current sovereign ESG investing framework and proposes improvements. The second part presents a survey on ESG practices among emerging market (EM) sovereign debt investors conducted by J.P. Morgan (JPM), which launched the first EM sovereign ESG index in 2018. This publication is a result of the World Bank's proactive engagement with stakeholders on pertinent sovereign ESG issues and is part of a publication series under the auspices of the Global Program on Sustainability (GPS).

Climate Change and Environment --- Corporate Social Responsibility --- Environment --- Finance and Development --- Finance and Financial Sector Development --- Governance --- Private Sector Development --- Sustainable Development Goals