Defining the country risk premium

Research evidence excerpt

Defining the country risk premium

17 July 2026

Access to finance enables pace Sustainability Global

Cost of capital as a transition speed driver

◆ For economically viable transition projects to move more Zoe Knight

quickly, access to capital must be in place Global Head, Sustainability Research & Integration HSBC Bank Middle East Limited, DIFC

zoe.knight@hsbc.com

◆ Financial conditions are an input factor for overseas +971 508951407

investment in large-scale decarbonisation activities Alastair Pinder, CFA

Head EM and Global Equity Strategist

HSBC Securities (USA) Inc.

◆ Our EM country risk premium updates change capital costs, alastair.pinder@us.hsbc.com

impacting the speed of project decision-making +1 212 525 5972

Amit Shrivastava*

Director, Sustainability; European Equity Strategy

HSBC Bank Middle East Limited, DIFC

What do increasing country risk premiums mean for controlling emissions? amit1.shrivastava@hsbc.com

HSBC equity strategists updated their cost of equity calculations this week in Cost of +971 450 93349

Equity 2026, 13 July 2026. Changes to one of the inputs into the calculation, the Hiba Ali*

Associate

country risk premium, are particularly relevant for sustainability investors, since it is Bangalore

an important driver of how expensive it is to invest in a market, in turn determining

how straightforward it is for project owners to find investment. Viewed from a net-zero * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is

transition lens, the highest impact emissions outcome projects come from shifting the not registered/ qualified pursuant to FINRA regulations

power system from high to low carbon intensity, as electrification is a climate solution,

power demand is increasing, and these are mostly country-specific projects.