Progressive climate action is not only a necessity but also a "powerful economic driver", said the UAE's special envoy for climate change, who called for greater investment in advancing the sector.
"If we do it right, it can actually put the world on a new low-carbon, high-growth, development trajectory," climate envoy Dr Sultan Al Jaber, who is also the UAE's Minister of Industry and Advanced Technology and managing director and group chief executive of Abu Dhabi National Oil Company, said.
The climate challenge needs to be seen as "an opportunity", Dr Al Jaber said during an online interview with Frederick Kempe, president and chief executive of Washington DC-based think tank, the Atlantic Council.
Movement restrictions put in place to stem the spread of Covid-19 led to a fall in carbon emissions in 2020, highlighting the potential for countries and energy-intensive companies to adopt measures that could continue to lower their carbon footprint.
Adnoc, which sells crude oil on behalf of Abu Dhabi, plans to lower its carbon footprint and reduce its emissions by 25 per cent over the next decade. Moreover, the commercial case for renewable energy "has never been stronger", Dr Al Jaber said.
In spite of the pandemic, the world added renewable energy capacity of 260 gigawatts last year, representing $300 billion worth of investments, he said.
"And this is something we should all be optimistic about, and we should very much build on."
On Friday, the UAE and the US underlined their joint commitment to take robust action on climate change before a crucial summit in Washington.
Both countries agreed to raise ambitions in tackling the issue following the Regional Climate Dialogue in Abu Dhabi earlier this month.
Dr Al Jaber, who met US climate envoy John Kerry during his visit, also spoke to energy secretary Jennifer Granholm ahead of a Leaders Summit organised by the White House.
The summit, which will be held on Thursday and Friday, will feature 40 world leaders discussing the climate challenge.
The US, which rejoined the Paris Agreement on January 27, is looking to re-establish a role as a leader in tackling global warming.
"This kind of relationship, dialogue and this type of climate diplomacy, delivering tangible outcomes, really reinforces our real deep strategic partnership with the US," Dr Al Jaber told Mr Kempe.
There are significant synergies to be generated through partnership with the "world's largest hydrocarbons producer and the world's largest economy", he added.
The UAE's climate envoy also stressed the country's efforts at producing a new generation of low-carbon fuels.
Earlier this year, Adnoc, along with other major state-backed entities Mubadala and ADQ, formed an alliance to produce hydrogen.
Adnoc will focus on increasing output of blue hydrogen, which is derived from natural gas through steam methane reforming, while the other partners will look to produce the fuel from renewable sources.
"So, we are identifying viable international market opportunities and developing a roadmap to create a hydrogen ecosystem, not to serve only the UAE market, but to actually cater for the global market," Dr Al Jaber said.
He also issued an "open invitation" to Adnoc's partners to help generate competitive hydrocarbons with "the least carbon emissions".
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
