Scientific Climate Ratings, an Edhec Business School venture, created Sovereign Climate Risk Ratings, “a new scientific standard for understanding and pricing the macroeconomic impact of rising temperatures on sovereign economies.”

Sovereign Climate Risk Ratings are calculated at two reference horizons, 2035 and 2050. Annual time series are also available. Each country receives a letter grade from A to G, with G representing the highest level of exposure. This “new standard” aims to provide a clear picture of winners and losers.

“The five economies least negatively affected by 2050 in our framework are Mongolia, Iceland, Russia, Kyrgyzstan and Norway (all rated A). Mongolia is the only country in our model showing a positive economic impact from rising temperatures by 2050, while the others are projected to suffer less than the global average”, said Edhec to ClimateAdaptation.life. 

Brazil, India, and the USA are projected to be among the main losers, with significant repercussions: in Brazil, projected GDP-per capita impacts in 2035 and 2050 are -5,8% and -13%; India loses 4.8% in 2035 and 10,8% in 2050. Still, the impacts vary a lot within countries. 

“For example, the United States of America is a sovereign entity with high internal climate heterogeneity: projected impacts vary substantially between warmer southern states such as Arizona, Texas and Florida, and cooler northern states such as Minnesota, Montana and North Dakota. By accounting for these subregional variations and differences in population distribution, the methodology projects a GDP-per-capita loss for the US of -4.6% in 2035 and -10.4% in 2050”, reads the note released last week. 

By 2035, the US has an overall grade of E, whereas most of Western Europe has grades ranging from A to C. Much of the African continent will be heavily exposed to extreme temperatures, with grades ranging from D to G. 

Italy is rated C, with an expected GDP-per-capita impact of -2.08% by 2030 and -8.57% by 2050, said Edhec. 

“However, this impact is not homogeneous across Italy’s 20 regions. The regional results show material dispersion, with the most exposed regions including Lazio, Campania, Veneto, Apulia and Lombardia, while Valle d’Aosta is the only region showing a slightly positive impact in our model”, said Edhec to to ClimateAdaptation.life.

The Sovereign Climate Risk Ratings are the result of a multi-stage development process. 

“That began with fundamental scientific research at the Edhec Climate Institute’s physical risk research programme in January 2025”, explains Edhec to ClimateAdaptation.life.  

The first phase led to the development of Edhec-Clirmap (the Edhec Climate-Induced Regional Macroimpacts Projector) an interactive open-access tool designed to assess the regional macroeconomic impacts of rising temperatures. 

“Building on this research foundation, Scientific Climate Ratings then translated and enhanced the underlying methodology into an operational, Ngfs-aligned sovereign rating framework over the course of 2026”, said Edhec, adding that the aim is to bridge the gap between academic climate research and the practical needs of sovereign investors, financial institutions and public-sector decision-makers.

Edhec said that Sovereign Climate Risk Ratings “capture, for the first time, the winners and losers in a future global economy where the effects of chronic physical climate risk have real and lasting impacts on Gross Domestic Product (GDP)”.

These ratings should deliver “economically interpretable, scenario-consistent expected macroeconomic impacts, enabling investors, asset managers and banks to put a price tag on sovereign climate risk”. The Ratings show subnational granularity: national GDP impacts are derived from estimates of Gross Regional Product (GRP). 

Sovereign Climate Risk Ratings are available across nine forward-looking climate pathways. The “framework also includes an Expected Scenario, derived from the probability-weighted aggregation of these nine pathways, which serves as the reference basis for the sovereign rating scale”.

The quantification of these “chronic risks” should, according to Edhec, be added to investors’ financial models.

“The economic impact is broadly in line with the level of warming: the warmer the world becomes, the larger the projected macroeconomic impact”. 

To illustrate this, Edhec provided results under three different scenarios: Net Zero 2050, corresponding to approximately 1.3°C of warming by 2100; Climate Breakdown, corresponding to approximately 4.4°C of warming by 2100; the Expected scenario, corresponding to approximately 3.1°C of warming by 2100. 

“This Expected scenario is probability-weighted across the full set of nine scientific climate scenarios and forms the basis of our rating framework”, said Edhec, providing the figures below.