The chart shows two columns of results and each country’s performance in blue. The red cross indicates the weighted score of the Bloomberg Global Treasury Index, while the multiple green crosses illustrate a range of implementation options for a climate-smart sovereign debt portfolio. Increasing the tilt strength allows us to control the extent of our overweight to leading countries (in the upper right quadrant) such as France, Canada and the UK.
This flexible tilting approach is also used by the recently launched Bloomberg Government Climate Tilted Bond index family. These indices focus on a single, clear objective: aligning country weights based on their readiness to achieve the goals of the Paris Agreement. The resulting index not only achieves a reduction in emissions intensity compared to the parent index, but also supports the transition to the real world by directing flows to governments with concrete plans to decarbonize their economies.
In addition to adjusting tilt strength, investors can use optimization to target specific outcomes, such as a specific CO2 Reduction in intensity or a desired increase in electricity generation from renewable energies. In addition, the inclusion of countries can be changed through thematic exclusions and weights can be limited for diversification. In each case, the resulting portfolios are backed by a robust, transparent and proprietary climate score from GOVS.
Stay on top of the race to net zero
The Bloomberg Government Climate Scores (or “GOVS”) and the Bloomberg Government Climate Tilted Bond Indices provide investors with tools to direct investments to countries best prepared to achieve global climate goals. We will delve further into this topic in an upcoming white paper and explore approaches to portfolio construction using the scores in more detail. Terminal users can use GOVS
The data and other information contained in this publication is for illustrative purposes only, is available “as is,” is non-binding and constitutes factual information rather than advice regarding financial products. BLOOMBERG and BLOOMBERG INDICES (the “Indices”) are trademarks or service marks of Bloomberg Finance LP (“BFLP”). BFLP and its affiliates, including BISL, the administrator of the indices or their licensors, own all proprietary rights in the indices. Bloomberg LP (“BLP”) or one of its subsidiaries provides global marketing and operational support and services to BFLP, BISL and their subsidiaries.