Scientific Climate Ratings identifies sovereign climate impact

 

Scientific Climate Ratings launched new sovereign climate risk ratings at London Climate Action Week that price the macroeconomic impact of rising temperatures on economies around the world.

The ratings were launched amid a growing appreciation of the impact of physical climate risk as a burning heatwave swept Europe and hit London during the climate event, and with analysts also sounding the alarm. 

Dutch risk analytics firm Ortec Finance also warned in May that sovereign debt faces credit downgrades and higher risk premiums as extreme weather and climate tipping points rise. 

The new sovereign ratings identify winners and losers in the future global economy in 2035 and 2050 as the effects of chronic physical climate risk increasingly hit countries' GDP. They capture output losses at a regional level that are then aggregated at a sovereign level.  

"Climate change is a global phenomenon, but climate risk is local and financial," said Remy Estran-Fraioli, CEO of Scientific Climate Ratings, a venture of the EDHEC Business School in Paris that was launched in June 2025. (...)

The sovereign climate risk ratings cover chronic physical risk arising from temperature-driven productivity shifts across 191 countries and more than 3,400 subnational regions, which together represent over 95% of global economic output. 

They are based on the academic research of the EDHEC Climate Institute and aim to help the market to better quantify and price how the financial value of assets will be affected by climate change and physical risk.