ISS Sustainability Solutions, the sustainable investment business of ISS Stoxx – Deutsche Börse’s corporate governance and data unit – has launched a new Sovereign Climate Impact Report, the latest update to its evolving suite of climate solutions, which has been developed to meet market demand for a sovereign-focused equivalent to the company’s Climate Impact Report that covers corporate issuers.

The Sovereign Climate Impact Report, ISS Sustainability Solutions points out, is a differentiated offering in the market in terms of methodological accuracy, transparency and data comprehensiveness, with more than 180 current and forward-looking metrics.

It is also a flexible, decision-useful solution that can be used to address a wide range of use cases for institutional investors, banks and insurers concerning climate risk mitigation and impact investing in the sovereign space.

The new offering, the company notes, enables investors to understand, measure, report and act on climate transition-related risks and impacts of their sovereign portfolios. It aligns sovereign and sub-sovereign exposures to the latest Partnership for Carbon Accounting Financials ( PCAF ) methodology and guidance.

As well, the new solution supports investors in fulfilling internal and external reporting climate-related disclosure requirements, including:

• International Sustainability Standards Board ( ISSB ) IFRS S2 and the Task Force on Climate-related Financial Disclosures ( TCFD )
• regulations, such as Sustainable Finance Disclosure Regulation and the Corporate Sustainability Reporting Directive
• FCA UK, Australian and Aotearoa New Zealand reporting standards.

The new sovereign report also encompasses carbon footprinting, transition analysis, scenario alignment and climate policy, all available on the company’s DataDesk platform. Underlying data factors can also be provided via data feed or application programming interface.

The new report includes carbon footprint data for sovereign and sub-sovereign portfolios, including land use, land-use change and forestry emissions and emissions intensities. An emissions PCAF quality score is presented for enhanced transparency. TCFD/ISSB metrics feature weighted average carbon intensity by scope.

The report’s transition risk analysis, the company shares, focuses on the energetic profile of sovereigns, including fossil fuel reserves and dependency, subsidies and their energy mix and power generation composition, which are compared with the net-zero scenario provided by the International Energy Agency.

Sovereign portfolios’ scenario alignment to net-zero emissions by 2050 is assessed using climate scenarios provided by the Network for Greening the Financial System, using current policies as a base line.

As well, the analysis at portfolio level contains a heat map, a portfolio implied temperature rise, plus cumulative alignment metrics.

Further innovations to the sovereign report, adds Till Jung, ISS Stoxx’s head of sustainability business, are planned for later this year.