Guterres seeks huge renewable investment shift from fossil fuels

UN Secretary General Antonio Guterres has called for an accelerated agenda to drive a just transition for the global energy system to meet net zero goals and deadlines.

The UN leader said the fossil fuel industry was the vital player in the push to meet the Paris Agreement target of capping global warming at 1.5ºC above pre-industrial levels. Speaking ahead of the Cop28 meeting that starts in the UAE in November, he stressed the importance of how the transition is achieved.

“We are hurtling towards disaster, eyes wide open”, he said. “It’s time to wake up and step up. The world must phase out fossil fuels in a just and equitable way.

"At Cop we have to make sure that those companies that are more linked to the oil and gas sectors recognise how important it is to be leaders in the creation of the economy of the future.

"We must invest in new technologies – on all fronts," he said. "But what is not fair is not to do the right things today based on the thinking that maybe one day there will be a technology that saves us."

In particular the UN chief raised the issue of insurers forced to quit the post-Glasgow international financial alliance by the threat of anti-trust action by US states. The UN leader called for detailed plans from financial institutions, saying they must encourage the global energy transformation.

Plans should include an explicit strategies for promoting the transition.

Dr Sultan Al Jaber, UAE Minister of Industry and Advanced Technology and Cop28 President-designate, told UN-led climate talks in Bonn this month that scaling up renewable energy would assist in the phasing out of fossil fuel.

Dr Al Jaber said there must be transformational shifts, but that these must come in tandem with energy security. He called for “a transition that promotes policies and investments that scale up renewable energy, while working towards an energy system that is free of unabated fossil fuels”.

“The phase-down of fossil fuels is inevitable. The speed at which this happens depends on how quickly we can phase up zero carbon alternatives, while ensuring energy security, accessibility and affordability."

Mr Guterres echoed some of those points when he said this week the transition must not only meet the goal of limiting global warming to 1.5°C but represent a just and inclusive package, bringing all countries and regions along. He said there must be a commitment to "massively boosting renewable investment in a just transition".

The oil and gas industry was encouraged by Mr Guterres to present credible, comprehensive and detailed new transition plans that include reducing emissions “up and down the value chain” – from production through to refining, distribution and use.

Palestine and Israel

Michael Young: Israel's 'iron wall' is sealing the country off from peace

Saeb Erekat: Palestine is capable of overcoming the coronavirus spread

Alexandra Chaves: Gazan artists paint to bring attention to the coronavirus

David Haye record

Total fights: 32
Wins: 28
Wins by KO: 26
Losses: 4

West Asia Premiership

Dubai Hurricanes 58-10 Dubai Knights Eagles

Dubai Tigers 5-39 Bahrain

Jebel Ali Dragons 16-56 Abu Dhabi Harlequins

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.”