Kamiar Mohaddes.

Study on climate change and credit ratings wins FT award

24 January 2025

The article at a glance

Research on how climate change is linked to sovereign creditworthiness, co-authored by Dr Kamiar Mohaddes of Cambridge Judge Business School, wins Academic Research with Impact Award at the 2025 Financial Times Responsible Business Education Awards.

Category: Faculty news News

A study on the link between climate change and sovereign credit ratings, co-authored by Kamiar Mohaddes, Associate Professor in Economics and Policy at Cambridge Judge, was a winner of the Academic Research with Impact Award at the 2025 Financial Times Responsible Business Education Awards.

The study, published in the journal Management Science, was cited by the FT for informing Standard Chartered Bank’s internal models for stress testing and loan provisioning. “The project highlights how cutting-edge research can integrate into financial systems to promote sustainability,” the FT said.

The article was co-authored by academics at business schools in Cambridge, Edinburgh, Sussex and Sheffield.

The article announcing the award to Kamiar and his co-authors quotes the Dean of Cambridge Judge, Professor Gishan Dissanaike, on the challenge of aligning academic priorities with societal challenges given the often-narrow focus of scholarly journals amidst huge global problems.

Government debt is valued at US$100 trillion

The FT said the winning study’s findings, aided by artificial intelligence to merge climate models with financial data, are significant because “sovereign debt – the money governments borrow – is one of the world’s largest asset classes, valued at about US$100 trillion”.

The winning paper said: “It is not enough to know that climate change is bad. Markets need credible, digestible information on how climate change translates into material risks. To bridge the gap between climate science and real-world financial indicators, we simulate the effect of climate change on sovereign credit ratings for 109 countries, creating the world’s first climate-adjusted sovereign credit rating.”

The study also says there is strong evidence that stringent climate policy, including honouring the Paris Climate Agreement, “could nearly eliminate the effect of climate change on ratings”.

Kamiar is also the Co-Director of climaTRACES Lab, a new interdisciplinary research initiative at the University of Cambridge focusing on climate, nature, and sustainability research. The team that won the FT Award are all members of the climaTRACES Lab.

Kamiar and another co-author of the paper, Matthew Argawala of the Bennett Institute for Public Policy at the University of Cambridge, will in February teach a new elective on the Executive MBA programme (EMBA) at Cambridge Judge based on the FT award-winning study. The elective entitled Economics of Climate Change and Nature is open to both current EMBA students and EMBA alumni.

This article was published on

24 January 2025.