The E-axes Forum on Climate Change, Macroeconomics, and Finance

Ulrich Volz

“Climate Change and Sovereign Risk”

Event description

Ulrich Volz presented the report on “Climate Change and Sovereign Risk” he co-authored with John Beirne, Natalie Ambrosio Preudhomme, Adrian Fenton, Emilie Mazzacurati, Nuobu Renzhi, and Jeanne Stampe. From the introduction:

This report provides a timely and very comprehensive assessment of the role played by climate change on sovereign risk. In particular, a number of transmission channels through which climate change affects sovereign risk are discussed in the report: the fiscal impacts of climate-related natural disasters, the fiscal consequences of adaptation and mitigation policies, the macroeconomic impacts of climate change, the impacts of climate risk on financial sector stability, the international trade and capital flow dimension, and the impact of climate change on political stability. The report provides a thorough examination of how these transmission channels apply to the economies of Southeast Asia, and shows that there are substantial risks for the majority of Southeast Asia from a macrofinancial stability perspective. As well as this, the report provides new empirical estimates on the impact of climate vulnerability on sovereign risk, with vulnerability to climate change in the economies of the Association of Southeast Asian Nations (ASEAN) being associated with sovereign bond yield premia of around 155 basis points on average. Countries with higher exposure to climate risks are shown to incur even higher premia on their sovereign borrowing costs.




Emanuele Campiglio
Associate Professor, University of Bologna

Ulrich Volz

Ulrich Volz is Founding Director of the SOAS Centre for Sustainable Finance and a Reader in Economics at SOAS, University of London. He is also a Senior Research Fellow at the German Development Institute and Honorary Professor of Economics at the University of Leipzig. Ulrich is a director of the Global Research Alliance for Sustainable Finance and Investment and serves on the advisory boards of the International Sustainable Finance Centre and SuFinDa, the Sustainable Financial Data Initiative. Ulrich is a lead author of a new study on Climate Change and Sovereign Risk as well as a 2018 UN report on Climate Change and the Cost of Capital in Developing Countries. He is a co-editor of a recently published NGFS volume on Case Studies of Environmental Risk Analysis Methodologies and the Routledge Handbook of Banking and Finance in Asia. Ulrich was the 2017 Banque de France Chair at EHESS in Paris. Ulrich holds a PhD from Freie Universität Berlin and was a Fox International Fellow and Max Kade Scholar at Yale University.

Paper and slides

“Climate Change and Sovereign Risk” (paper)

“Climate Change and Sovereign Risk” (slide)



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