About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

New Bloomberg Indices Provide Sovereign Bond Climate-Tilted Benchmarks

Subscribe to our newsletter

Investors seeking to integrate measures of climate transition risk into the portfolio management process **can now benchmark against countries’ climate preparedness via a new set of Bloomberg indices.

The Bloomberg Government Climate Tilted Bond Index family integrates carbon-reduction performance and other factors into sovereign bond indices. They are built with Bloomberg’s proprietary Government Climate Scores, which assess a government’s relative preparedness in the transition to a low-carbon world using transparent, data-driven indicators.

The 14  indices were launched this week to cater to growing demand for country-level sustainability investment tools. Already a handful of large financial clients have plans to use the indices and demand has come mainly from Europe, where nations and their companies operate under strict environmental regulations. The indices are designed to consider countries’ progress against climate ambitions and provide a window into future outlook against those ambitions, said Chris Hackel, head of sustainable indices at Bloomberg.

“Over the past few years, a lot of our clients have put out funds and new products that are based off corporate debt or equities and incorporate  decarbonisation or transition goals, but there’s been increasing demand in the market for approaches that incorporate these considerations for country debt,” Hackel told ESG Insight. “What we’ve seen clients looking for here is a particular measure of how well a country is prepared for the transition to a low-carbon economy.”

Big Business

Data companies have been busy building new indices as expanding regulatory sustainability obligations prompt investors to seek benchmarks against which to track and test their investment theses. S&P Dow Jones, Arabesque and ISS ESG have all launched ESG-focused gauges in the past year. Bloomberg has also been active in the index building sector, launching several sustainable fixed-income benchmarks, as well as Paris-aligned benchmarks and other climate transition indices.

Indices are also big business in the passive investment sector. According to Bloomberg News, 90 per cent of ESG-focused ETFs track indices.

The latest family of Bloomberg gauges derive their firepower from Bloomberg’s Government Climate Scores, which assign weighted values to countries based on a three-pillar assessment. They factor a nation’s carbon transition, its power sector transition and its climate policy.

The carbon and power sector pillars incorporate metrics on present and future performance while the climate policy measure takes into consideration governments’ net-zero commitments, their level of green bond issuance and the scope of their power policy. The scores’ standard calculation methodology also can be customised to stress specific client objectives, such as placing an emphasis on carbon emissions performance.


Scores are nourished by Bloomberg’s own datasets, including those from its BloombergNEF (BNEF) business, and the final scores are applied to bonds of all tenors issued by each nation.

“The Bloomberg Government Scores informing the indices represent how much progress each country is making relative to other countries in terms of meeting its Paris Agreement goals and transitioning its energy sector to a low-carbon economy,” said Hackel.

Unsurprisingly, given the region’s emphasis on ESG integration within its financial sector, European countries outperform nations from elsewhere in Bloomberg’s Government Climate Scores. French, Italian and British bonds top the scores list. At the lower end of the scale, China trails the US and Japan.

That is also seen in the demand profile, which is centred largely on European clients. Hackel said those investors are also looking for aggregated indices to help them take a broad-based approach to fixed income climate investing.

Nevertheless, Bloomberg is seeing “significant engagement” from US asset owners, in particular, Hackel said, adding that Asian clients had also shown interest.

Subscribe to our newsletter

Related content


Recorded Webinar: Cross-Regulation Data Consistency and Accuracy

Regulatory reporting obligations continue to expand, bringing with them more overlaps of data elements across reporting regimes. As many firms struggle with the accuracy and completeness of individual reporting obligations, regulators have increasingly begun to focus on cross-regulation data consistency in their data validations and examination processes. This webinar will identify cases of data overlap...


Museum of Nature’s History Offers Investors Clues to its Future

From fossils of the largest beasts to have roamed Earth to microscopic organisms, the ornate halls of London’s Natural History Museum are stuffed with 80 million specimens that chart the past 5 billion years of evolution. The 142-year-old institution is also a repository and manager of data that may hold the key to predicting how...


TradingTech Briefing New York

Our TradingTech Briefing in New York is aimed at senior-level decision makers in trading technology, electronic execution, trading architecture and offers a day packed with insight from practitioners and from innovative suppliers happy to share their experiences in dealing with the enterprise challenges facing our marketplace.


Corporate Actions Europe 2010

The European corporate actions market could be the stage of some pretty heavy duty discussions regarding standards going forward, particularly with regards to the adoption of both XBRL tagging and ISO 20022 messaging. The region’s issuer community, for one, is not going to be easy to convince of the benefits of XBRL tags, given the...