Enhances Climate Risk Evaluation: ASCOR Project Updates Framework and New Spending Indicators for Investors

Antonina Scheer, Research Project Manager at TPI, emphasized a significant improvement within the framework's Pillar 3, now termed 'climate finance' instead of 'opportunities to finance the transition.' This modification broadens the scope to encompass elements such as international finance contributions and opportunities in renewable energy, in addition to the initial focus on historical emissions trends, climate policies, and financial requirements for climate goals.

An innovative addition under 'climate finance' is the emphasis on the disclosure of government spending related to climate action and climate budget tagging, leveraging insights from World Bank reports and other literature. This addition aims to address a gap in the previous framework, offering crucial information to investors regarding how nations handle climate risks.

During a public consultation, ASCOR refined the tool to enhance simplicity and ensure practicality. Feedback prompted the streamlining of indicators, prioritizing fairness, particularly for middle and low-income countries. The updated framework now comprises 13 sub-categories with 39 indicators, down from the initial 19 sub-categories and 55 indicators. These indicators are rooted in comprehensive policy analysis, and the tool, scheduled for release in early December, will provide source links for each indicator.

Lastly, the methodology publication of the framework will be succeeded by the release of assessments for 25 countries, including major emitters such as the UK, Australia, Bangladesh, and Japan. Starting in 2024, ASCOR aims to extend assessments to over 100 countries covered in major sovereign bond indices.

Antonina Scheer, Research Project Manager at TPI Centre, commented, "This aspect was absent in the previous framework and demanded thorough research to formulate an appropriate methodology, incorporating insights from World Bank reports and other literature on climate budget tagging practices."