In this podcast we breakdown climate transition risk within the global corporate bond market via a new research paper from Emmi here. Covering $24 trillion of outstanding debt, we examine the impact of various climate scenarios on this debt, revealing substantial risk even under moderate Paris-aligned targets.
A key finding is that "green bonds," while intended to support environmentally friendly projects, do not inherently reduce climate transition risk for investors. The analysis uses a proprietary machine learning model to quantify financed emissions and potential carbon liabilities, offering insights into which industries and companies face the greatest financial exposure. Ultimately, the paper emphasises the need for investors to focus on companies actively reducing emissions to mitigate climate transition risk.
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