Investments by sovereign investors globally into funds and companies following environmental, social and governance standards surged by more than three times last year as government investment arms continued to add sustainability-linked assets to their portfolios.
Investments by sovereign wealth funds in the ESG space surged to $22.7 billion at the end of last year from $7.2bn reported in 2020, according to Finbold.com and data from industry tracker Global SWF.
The number of sustainability-linked investment deals at the end of 2021 also rose to 37 from 19 a year earlier.
Investment in companies and funds tracking sustainable stocks and bonds stood at $5.2bn in 2019. It remained relatively low in the past six years before the jump in 2021, with 2016 recording the lowest value over the period at $3.7bn.
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While investments in the ESG space rose, sovereign wealth funds’ capital deployment into oil and gas-related assets declined by 46.92 per cent to $6.9bn, down from $13bn in 2020. Eight oil and gas sector deals were recorded last year, the lowest number of transactions, according to the report.
Sustainable investments and build back better and greener economies have come into sharp focus as the world emerges from the pandemic-driven showdown. It is becoming a central theme for investors who are reshaping their portfolios, cutting down on hydrocarbons investment and seeking yields in greener assets and funds that follow ESG standards.
Sustainability-linked investments are at the heart of the UAE’s sovereign wealth funds’ capital deployments strategies, which are investing tens of billions of dollars domestically across the broader Middle East and North Africa region and elsewhere in the world.
“Like all investors, we are convinced that sustainability is extremely important, which is becoming even more important in the future,” Jean-Paul Villain, director of Abu Dhabi Investment Authority’s strategy and planning department, told the Abu Dhabi Sustainable Finance Forum last year.
Mubadala Investment Company, which bagged the global sovereign wealth fund industry’s top honour and was nominated by Global SWF as the “2021 Fund of the Year”, also lays emphasis on ESG. It is “increasingly material to the performance of our investment both in terms of downside risk and opportunities”, David Crofts, executive director of enterprise risk management and responsible investment at Mubadala Investment Company, said last year.
Saudi Arabia's Public Investment Fund’s governor Yasir Al Rumayyan has also urged the global investment community to capitalise on the "unprecedented opportunity" offered by the Covid-19 pandemic to transform the global economic landscape.
Assets managed by the world’s sovereign wealth funds and public pension funds reached a record high of $31.9 trillion in 2021. Assets held by sovereign wealth funds rose 6 per cent to $10.5tn during the year, while those managed by public pension funds climbed 8.7 per cent to $21.4tn, according to Global SWF's annual report.
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Growth of sustainable investing in 2021 indicates that the ESG space has a financial appeal for sovereign wealth funds and can play a crucial role in its growth.
“Last year’s growth indicates that the ESG space has a financial appeal for investors, and SWFs play a crucial role,” Finbold.com cited the latest Global SWF report as saying.
“In general, the SWFs are uniquely positioned to promote the global environmental, ESG agenda and investing in certain products is the first step.”
Like sovereign investors, sustainable investing is also an overriding theme for private and institutional investors and global fund managers. BlackRock, the world’s biggest asset manager, expects sustainability to play an increasing role in how investor portfolios will shape up as ESG becomes an important consideration in investment decisions.
“Sustainable transition has become very central to the way investors are thinking in most regions, whether it is asset managers or the clients we manage money for,” Stephen Cohen, BlackRock’s head of Europe, Middle East and Africa business, told The National in November.
In October, the International Monetary Fund urged the $50tn global investment funds industry to step up efforts to finance the transition to a greener economy and help mitigate the effects of climate change.
The President's Cake
Director: Hasan Hadi
Starring: Baneen Ahmad Nayyef, Waheed Thabet Khreibat, Sajad Mohamad Qasem
Wear the right fabric for the right season and occasion
Always ask for the dress code if you don’t know
Wear a white kandura, white ghutra / shemagh (headwear) and black shoes for work
Wear 100 per cent cotton under the kandura as most fabrics are polyester
Don’ts
Wear hamdania for work, always wear a ghutra and agal
Buy a kandura only based on how it feels; ask questions about the fabric and understand what you are buying
MATCH INFO
World Cup qualifier
Thailand 2 (Dangda 26', Panya 51')
UAE 1 (Mabkhout 45 2')
Brief scores:
Toss: Sindhis, elected to field first
Kerala Knights 103-7 (10 ov)
Parnell 59 not out; Tambe 5-15
Sindhis 104-1 (7.4 ov)
Watson 50 not out, Devcich 49
Profile of Tarabut Gateway
Founder: Abdulla Almoayed
Based: UAE
Founded: 2017
Number of employees: 35
Sector: FinTech
Raised: $13 million
Backers: Berlin-based venture capital company Target Global, Kingsway, CE Ventures, Entrée Capital, Zamil Investment Group, Global Ventures, Almoayed Technologies and Mad’a Investment.
Are non-fungible tokens a currency, asset, or a licensing instrument? Arnab Das, global market strategist EMEA at Invesco, says they are mix of all of three.
You can buy, hold and use NFTs just like US dollars and Bitcoins. “They can appreciate in value and even produce cash flows.”
However, while money is fungible, NFTs are not. “One Bitcoin, dollar, euro or dirham is largely indistinguishable from the next. Nothing ties a dollar bill to a particular owner, for example. Nor does it tie you to to any goods, services or assets you bought with that currency. In contrast, NFTs confer specific ownership,” Mr Das says.
This makes NFTs closer to a piece of intellectual property such as a work of art or licence, as you can claim royalties or profit by exchanging it at a higher value later, Mr Das says. “They could provide a sustainable income stream.”
This income will depend on future demand and use, which makes NFTs difficult to value. “However, there is a credible use case for many forms of intellectual property, notably art, songs, videos,” Mr Das says.
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
UAE and Russia in numbers
UAE-Russia ties stretch back 48 years
Trade between the UAE and Russia reached Dh12.5 bn in 2018
More than 3,000 Russian companies are registered in the UAE
Around 40,000 Russians live in the UAE
The number of Russian tourists travelling to the UAE will increase to 12 percent to reach 1.6 million in 2023
UAE squad Saqib Nazir (captain), Aaqib Malik, Fahad Al Hashmi, Isuru Umesh, Nadir Hussain, Sachin Talwar, Nashwan Nasir, Prashath Kumara, Ramveer Rai, Sameer Nayyak, Umar Shah, Vikrant Shetty
Dark Souls: Remastered
Developer: From Software (remaster by QLOC)
Publisher: Namco Bandai
Price: Dh199
Prophets of Rage
(Fantasy Records)
ASHES SCHEDULE
First Test
November 23-27 (The Gabba, Brisbane) Second Test
December 2-6 (Adelaide Oval, Adelaide) Third Test
December 14-18 (Waca Ground, Perth) Fourth Test
December 26-30 (Melbourne Cricket Ground, Melbourne) Fifth Test
January 4-8, 2018 (Sydney Cricket Ground, Sydney)
Title: Assistant dean of students and director of athletics
Favourite sport: soccer
Favourite team: Bayern Munich
Favourite player: Franz Beckenbauer
Favourite activity in Abu Dhabi: scuba diving in the Northern Emirates
INFO
Schools can register for the Abu Dhabi Schools Championships at www.champions.adsc.ae
What it means to be a conservationist
Who is Enric Sala?
Enric Sala is an expert on marine conservation and is currently the National Geographic Society's Explorer-in-Residence. His love of the sea started with his childhood in Spain, inspired by the example of the legendary diver Jacques Cousteau. He has been a university professor of Oceanography in the US, as well as working at the Spanish National Council for Scientific Research and is a member of the World Economic Forum’s Global Future Council on Biodiversity and the Bio-Economy. He has dedicated his life to protecting life in the oceans. Enric describes himself as a flexitarian who only eats meat occasionally.
What is biodiversity?
According to the United Nations Environment Programme, all life on earth – including in its forests and oceans – forms a “rich tapestry of interconnecting and interdependent forces”. Biodiversity on earth today is the product of four billion years of evolution and consists of many millions of distinct biological species. The term ‘biodiversity’ is relatively new, popularised since the 1980s and coinciding with an understanding of the growing threats to the natural world including habitat loss, pollution and climate change. The loss of biodiversity itself is dangerous because it contributes to clean, consistent water flows, food security, protection from floods and storms and a stable climate. The natural world can be an ally in combating global climate change but to do so it must be protected. Nations are working to achieve this, including setting targets to be reached by 2020 for the protection of the natural state of 17 per cent of the land and 10 per cent of the oceans. However, these are well short of what is needed, according to experts, with half the land needed to be in a natural state to help avert disaster.
Miss Granny
Director: Joyce Bernal
Starring: Sarah Geronimo, James Reid, Xian Lim, Nova Villa
3/5
(Tagalog with Eng/Ar subtitles)
Favourite things
Luxury: Enjoys window shopping for high-end bags and jewellery
Discount: She works in luxury retail, but is careful about spending, waits for sales, festivals and only buys on discount
University: The only person in her family to go to college, Jiang secured a bachelor’s degree in business management in China
Masters: Studying part-time for a master’s degree in international business marketing in Dubai
Vacation: Heads back home to see family in China
Community work: Member of the Chinese Business Women’s Association of the UAE to encourage other women entrepreneurs
