The impact of climate change on national spending on disaster recovery, climate change mitigation, and adaptation projects can lead to material risks for sovereign debt. Emerging market countries are particularly vulnerable, as they often lack capital or incur higher funding costs, which intensifies the risks they already face. For example, many of these countries are vulnerable to food insecurity from both the impact of climate change on their own agricultural production and higher prices for imports. Our investment team is committed to enhancing their understanding of environmental risk in sovereigns and its interconnection with fiscal and monetary conditions.