SWFs, asset managers and private investment funds convene to support Paris Agreement

Members express intention to formally establish One Planet Sovereign Wealth Funds as a permanent organisation, supporting climate action

The Abu Dhabi Investment Authority and Mubadala co-hosted the One Planet Sovereign Wealth Funds (Opswf) Network in Abu Dhabi. Stephen Lock / The National

Global leaders and 46 chief executives from the One Planet Sovereign Wealth Funds Network reaffirmed their commitment to the Paris Agreement on climate change at the fifth annual Opswf summit in Abu Dhabi on Thursday.

French President Emmanuel Macron, John Kerry, the US special presidential envoy for climate and Mary Schapiro, head of the Task Force on Climate-Related Financial Disclosures (TCFD) secretariat, met financial sector leaders at the gathering to advance the community's contribution to achieving the goals of the Paris Agreement.

The summit was co-hosted by the Abu Dhabi Investment Authority (Adia) and Mubadala Investment Company.

The escalating climate emergency combined with the current energy supply challenges calls for reinforced co-operation across the financial system, a communique from the summit said.

At the gathering, chief executives from the financial sector agreed that complementary solutions to both must be found at the same time to maintain momentum in the race to ensure the planet does not warm by more than 1.5°C and compound catastrophic climate outcomes.

The Opswf initiative championed by Mr Macron was launched at the One Planet Summit in December 2017 in Paris to accelerate the integration of climate change analysis into the management of large, long-term and diversified asset pools.

The goals of SWFs of long-term growth, the protection of intergenerational wealth and providing for a sustainable future coincide with the Paris Agreement objective, namely, the protection of the planet for generations to come, an Opswf statement said.

“The Opswf Network has demonstrated that increased co-operation among asset managers and private equity funds can contribute to the systems change we need to address climate change,” said Mr Macron.

To implement the Opswf framework, chief executives agreed on the importance of acquiring new climate-related capabilities and the need for close collaboration between asset owners and fund managers on related issues.

Mr Kerry said: “Redoubling our efforts to scale-up investments in climate action, including in some of the world’s fastest growing markets, will be critical to make these ambitions a reality."

Matt Whineray, chief executive of NZ Super Fund; Lawrence Yanovitch, Opswf Secretariat; Yasir Al-Rumayyan, governor of the Public Investment Fund; Khaldoon Al Mubarak, managing director and group chief executive of Mubadala Investment Company; Khalil Mohammed Sharif Foulath, member of the board of Adia and senior deputy chairman of the investment committee; Ghanem Suleiman Al-Ghenaiman, Kuwait Investment Authority board member & managing director and Ahmed Ali Al-Hammadi, chief investment officer of Qatar Investment Authority. Photo: Opswf

The Opswf, under Mr Macron’s leadership, has the potential "to drive market transformation, leveraging the experience of sovereign wealth funds, asset managers and private equity funds to mobilise finance for low emission, resilient transitions around the world", he said.

Members also expressed their intention to formally establish Opswf as a permanent organisation in support of the collaborative efforts and stewardship of Opswf Network members to encourage the change necessary to achieve the goals of the Paris Accords.

“Private sector leaders are making bold commitments to tackle climate change, but their ability to deliver is limited by a lack of accurate data,” said Ms Schapiro.

“It’s a big problem at the heart of the climate battle and we look forward to engaging with the One Planet Sovereign Wealth Fund Network as we work on providing freely available, transparent, standardised data that will help investors make informed decisions and enable assessment of progress toward net zero.”

During the past 12 months, One Planet sovereign wealth funds, asset managers and private investment companies have engaged in peer exchanges on technical competency including carbon foot-printing and the implementation of the TCFD recommendations. In June, Growthfund, the national fund of Greece, hosted two days of expert meetings in Athens for Network members.

John Kerry, US Special Presidential Envoy for Climate. Photo: Opswf

At the Abu Dhabi summit, Opswf Network members agreed to further accelerate the pace of acquiring these core competencies through the peer exchange programme.

Chief executives reviewed the progress made by Opswf Network members, which included a selection of more than 100 climate investment actions, with data points, as chronicled in the 2022 Opswf Framework Companion Document, the statement said.

The network members are aligning with the Opswf framework through a variety of measures, including investing in dedicated climate-related funds, adopting emission reduction investment strategies, institutionalising ESG (environmental, social and governance) policies, and forming a better understanding of the effects of climate change on their existing portfolios, the statement said.

Opswf members are advancing on the principle of ownership through active stewardship of their investments to mainstream TCFD reporting among their fund managers and investing in funds that support the transition of companies, large and small, it added.

Moreover, members are integrating climate solutions by deploying capital at a significant scale into renewables and clean energy tech domestically and globally.

The company chiefs at the Abu Dhabi summit reviewed the findings of three member-led workstreams focusing on climate data, clean hydrogen and renewables in emerging markets — all key in achieving the goals of the Paris Agreement.

Mary Shapiro, Head of the TCFD Secretariat. Photo: Opswf

• Harmonising climate data for private markets: A fundamental barrier exists in measuring, managing, and mitigating SWF portfolios’ climate impact due to the struggle to access reliable data to support informed decision-making. In 2020, Opswf Network members agreed to support the TCFD recommendations as a universal standard. In 2021, members galvanised around supporting the TCFD in the private markets, which have lagged the public markets. Today, the significant majority of the private markets are not disclosing climate-related data, preventing investors from incorporating climate considerations into decision-making.
• Accelerating investments in clean hydrogen: Clean hydrogen is a key lever to achieving the goals of the Paris Agreement. In line with the Opswf framework, investing in clean hydrogen can help solve the energy trilemma of sustainable, secure, and affordable energy in support of decarbonising global economies, including hard-to-abate industries. Investment in clean hydrogen can be significantly accelerated in the coming five years, provided the appropriate enablers are in place.
• Accelerating investments in renewables: Investing in renewable energy in the markets of emerging and developing economies constitutes a massive investment opportunity from the triple perspective of impact, risk and return. Reducing carbon emissions in these countries while meeting rising energy demand will require significantly scaling-up private sector engagement and is critical to align with the goals of the Paris Agreement.