The Sustainability of Nations

Jan Anton van Zanten ()
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Jan Anton van Zanten: Osmosis Investment Management NL

Chapter 8 in Big Money, Better World?, 2026, pp 119-143 from Springer

Abstract: Abstract Government bonds represent more than a quarter of all invested capital, yet sustainable investing has largely ignored them. This chapter argues that this neglect is both a missed opportunity and a correctable one – and that correcting it requires confronting a fundamental flaw in how investors currently screen countries. Sovereign ESG ratings, the dominant tool for sustainable government bond investing, suffer from an ingrained income bias: Roughly 90% of a country’s score is explained by national wealth. The result is a hedgehog approach that directs capital toward rich countries that do not need it, while withholding it from developing nations making genuine progress on health, education, and environmental sustainability. The fox asks a different question: Not where a country stands today, but whether its policies are capable of driving it forward. Drawing on original research covering 84 sustainability indicators across 170 countries, this chapter presents a methodology for evaluating government policies for sustainable development and shows how these insights can be translated into practical investment portfolios. Sovereign engagement adds a further tool, allowing investors to use their voice to encourage governments to adopt more sustainable policies. Together, these approaches open a new and largely untapped frontier for sustainable investing.

Keywords: sovereign ESG ratingsgovernment bondsSDG financing gap; emerging marketssustainable sovereign debtSDG policy scores (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-032-32442-9_8

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DOI: 10.1007/978-3-032-32442-9_8

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