Sovereign Wealth Funds & Their Stance on Climate Change

by Garima Gupta

The International Forum of Sovereign Wealth Funds and One Planet Sovereign Wealth Funds have collaborated to publish a report on SWFs and climate initiatives, titled ‘Mighty oaks from little acorns grow: Sovereign wealth funds’ progress on climate change’.  Their analysis is based on a self-reported survey of 34 SWFs’ stance on climate change. It highlights that there has been collective SWF investment of over $5 billion in the past five years in sectors such as agri-tech, forestry, and renewables. However, there is still a wide financing gap ranging between $1.6 trillion to $3.8 trillion annually for low-carbon transition, which SWFs, through their investments, could help to close.  The study indicates that 83% of respondents perceived climate-related policy change as a significant risk to the financial system.  Moreover, it highlights that the SWFs who participated in the survey already recognize the risks and opportunities of climate change to their investment decisions.

The report concludes with six prescriptive recommendations which are to: (i) adopt and implement climate-related policies, (ii) seek out the appropriate talent and expertise, (iii) explore board member and executive education, (iv) use metrics, (v) communicate to all stakeholders and (vi) partner with peers and international initiatives.

The press release can be accessed here.