As natural hazards and climate-change risks increasingly materialize, quantifying sovereign bonds’ physical and transition risk may help investors determine the climate resiliency of their portfolios. Major fossil-fuel producers largely comprise the bottom quartile of countries for the MSCI Climate Change and Natural Hazards Risk Factor Score due to a combination of physical and transition risks. Investors can use this information to not only identify sovereign-bond issuers with higher climate-related risk but determine where investments may create the most impact. Climate change is a major risk for sovereign credit. Hurricane María, the displacing floods of Pakistan and enormous bushfires in Australia are all examples of natural hazards that have had a significant macroeconomic impact. For that reason, measuring a country’s exposure to and management of both the physical and transition risks of climate change is becoming an increasingly important consideration for sovereign-debt investors. […]