In the continuing struggle in opposition to local weather change, some have warned that world sovereign wealth funds, which account for a mixed $10 trillion in property, are on the improper facet of historical past.
Christiana Figueres, the previous govt secretary of the United Nations Framework Conference on Local weather Change, argued that wealth funds have to replace methods and cease attempting to “take benefit” of the rise in international temperatures for financial achieve, Bloomberg reviews.
“Sovereign wealth funds’ concern with local weather change has to this point centered overwhelmingly on managing local weather threat and profiting from the alternatives ensuing from the low-carbon transition,” Figueres advised Bloomberg. “Given the gravity of the local weather disaster, that is not ample.”
The trade’s reluctance to shift their investments implies that trillions of {dollars} that could possibly be utilized to struggle in opposition to local weather change are nonetheless being funneled into areas designed to maximise financial returns, which can embody much less sustainable sectors like crude oil.
Wealth funds “have to take an lively position in decreasing their portfolio carbon footprints,” Figueres mentioned.
The warning comes amid rising considerations over using environmental, social, and governance, or ESG, methods to assist the monetary trade generate one other income stream with out really making significant modifications on points like local weather change or social justice, a phenomenon some have criticized as “greenwashing.”
In Europe, fund managers have already needed to backtrack on their ESG label for $2 trillion in property because of extra stringent rules what might be labeled as sustainable. The wealth administration arm of Deutsche Financial institution AG even made current headlines because the U.S. and Germany appeared into allegations of greenwashing on the firm.
Whereas Figueres didn’t outright censure greenwashing within the trade, the previous UN govt accused wealth funds of capitalizing on methods that proceed to contribute to the next carbon footprint. For instance, whereas Norway hasn’t signed up its $1.four trillion fund to the Web-Zero Asset Proprietor Alliance, Figueres argued that if Norges Financial institution Funding Administration, the world’s greatest wealth fund, turned a signatory, the sovereign wealth fund may assist flip some heads.
“NBIM is a extremely influential investor, and is acknowledged worldwide as a pacesetter in company governance, clear reporting, and lively possession,” Figueres mentioned. “Its instance can be famous all around the world.”
For extra information, info, and technique, go to the ESG Channel.
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