Geopolitical shocks compound long-term systemic risks for sovereign issuers – BNP Paribas Asset Management

The war in Ukraine has acted to exacerbate or complicate more fundamental and pervasive climate change and energy risks for sovereigns, argues Malika Takhtayeva, Sustainable Fixed Income Lead at BNP Paribas Asset Management.

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... As we are all well aware, the war is having significant effects on financial and commodity markets – and economies – worldwide. Recent price shocks sit on top of an inflationary trend that BNP Paribas Asset Management believe would have persisted over 2022 anyway due to unfavourable climate change-related weather conditions and the increasing cost of fertilisers and energy needed for food production. These inflationary pressures highlight the need for governments to better respond to physical climate risk and to look to alternative methods of food production.

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