Major sovereign wealth funds to get tough on climate change

Six of the world’s largest sovereign wealth funds are expected to publish a climate change strategy in France later today.

The funds are meeting French President Emmanuel Macron to work out how they can better support the goals of the Paris climate agreement.

“Beyond the colossal amounts these funds manage, it’s the snowball effect we’re betting on,” said one French Government adviser, according to the Reuters news agency. “By getting them to make this joint pledge, there will be a ricochet effect spreading across global finance.”

The funds manage an estimated $2 trillion and are largely taken from major oil-producing countries: United Arab Emirates, Kuwait, Saudi Arabia, Qatar and Norway. The sixth is from New Zealand.

“A big part of our work has been to create trust and show there is political leadership to get them moving, showcase them. It’s not greenwashing,” added the adviser.

Reuters reports that the guidelines should set a standard on where to invest, and will include obligations from companies to report on their carbon footprint.

Norway’s sovereign wealth fund is the largest in the world and has already taken steps to exclude fossil fuel companies from its list of assets. The fund has divested from 77 companies in the coal industry and could follow through on a recommendation to dump all its petroleum holdings.

Climate action has been less forthcoming from the Gulf States and it remains to be seen how binding their commitments will become. New Zealand has announced it will ban future offshore oil & gas exploration.

Since taking office in 2017, President Macron has been keen to develop his credentials as a climate leader. This includes making bold pledges on renewable energy, hosting the One Planet Summit last December, and lobbying for stronger action on the European level. He has also advocated spending 40 percent of the EU’s entire budget on climate change.

 

Photo Credit: kremlin.ru