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Climate Change Economics Responsible Investing (ESG) Fixed Income Commentary

Sovereign ESG Insights March 2021

30 April 2021
1 min read

What You Need to Know

ESG saw global improvements in 2020, mostly across social indicators. Inequalities and vulnerabilities amplified by the pandemic could continue to negatively affect near-term total ESG scores. But by exposing these deficiencies, the crisis is fostering positive ESG changes in health care systems, environmental sustainability and more.

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Key Developments

  • Latest ESG trends—Updates of our ESG data point toward improving dynamics over the course of 2020 in both developed markets (DM) and emerging markets (EM), mostly driven by advances in social indicators. This is a welcome and positive development, yet it’s uncertain if these gains can be sustained.
  • COVID-19 and its impact on ESG—The pandemic is expected to exacerbate societal inequalities and vulnerabilities. The net impact on social indicators as well as aggregate ESG scores is likely to be negative near term.
  • ESG beyond the pandemic—The crisis can be a trigger for positive ESG changes by exposing deficiencies in health care systems, social inequality and environmental sustainability as well as the need for future investment in these areas
  • Latest trends in sustainable issuance— Governments’ increasing focus on environmental and social policies has also been reflected in significant increases in sustainable finance issuance (bonds and loans) over the past year, supported by strong investor appetite for ESG-linked investment products.

At-A-Glance - "S" Leads Improvement Trends

At-A-Glance –“S” Leads Improvement Trends

Source: AllianceBernstein (AB)

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