Insights

Forward-Looking Climate Metrics in Corporate Bond Portfolios

Discover how implied temperature rise, carbon risk rating, and climate value at risk can inform corporate bond strategies. Uncover coverage, risk, and opportunity insights for investors interested in building more climate-aware portfolios.

Climate Specialist
Sustainable Investing Strategist

Forward-looking climate metrics—such as implied temperature rise (ITR), carbon risk rating (CRR), and climate value at risk (CVaR) covering policy, technology, and physical risks—are reshaping how many institutional investors who prioritize climate factors manage corporate bond portfolios. These measures can reveal potential future vulnerabilities and opportunities beyond conventional backward-looking data, like emissions.

This digest is based on the research paper “Integrating forward-looking climate metrics in corporate fixed-income index portfolios”. Published in January 2025 as part of the CFA Institute Research and Policy Center's Investment Innovations Toward Achieving Net Zero: Voices of Influence*, the paper explores data coverage, risk correlations, and sector impacts, helping you gauge how these metrics might influence allocation decisions.

Download our summary for key findings and practical guidance on incorporating these metrics into your fixed-income strategy if climate integration is part of your investment approach. Please note that this digest is a distilled version of the original CFA paper, designed to provide essential insights. Click “Read More” below to access it.

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