John Kerry calls UAE’s net-zero initiative an example for other energy-producing nations

US special climate envoy John Kerry says the UAE’s strategic net-zero initiative is an example for other energy-producing nations to follow.

The UAE announced the initiative on Thursday to reduce carbon emissions by 2050, which includes plans to invest Dh600 billion in clean and renewable energy sources in the next three decades.

Writing on Twitter, John Kerry said: "Sticking to 1.5 C requires ambitious climate commitments. I salute UAE for heeding the call ahead of Cop26.

"Mohamed bin Zayed's Net Zero 2050 Strategic Initiative is an example for other energy-producing nations. We must take strong action in this critical decade."

UN Secretary General Antonio Guterres said he looked forward to the UAE submitting a new climate action plan and encouraged other Gulf states to follow.

"I welcome the announcement by the United Arab Emirates of its intention to achieve net zero emissions by 2050," he said.

"I look forward to the UAE submitting a new climate action plan in line with this ambitious vision & encourage other Gulf states to follow this example ahead of Cop26."

The UAE's net-zero announcement came ahead of the crucial Cop26 climate conference in Glasgow next month, which has been described as the most important summit since the Paris Agreement in 2015.

The strategic initiative aligns with the Paris deal. Agreed to in 2015 and signed by 195 countries, including the UAE, the objective of the Paris deal is to limit the global average temperature increase to 1.5°C above pre-industrial levels.

Britain has described Cop26 as the “last best chance” to avert climate catastrophe brought about by global warming.

UK prime minister Boris Johnson described the UAE decision as "a significant step in tackling climate change".

"Fantastic news that the UAE has become the first Gulf country to commit to Net Zero emissions by 2050," said Mr Johnson.

"This is a significant step in tackling climate change and I hope more countries commit to Net Zero ahead of Cop26."

Cop26 president Alok Sharma said he hoped the "historic announcement" would urge others in the region to make similar commitments.

"I am delighted that the UAE has announced it will reach net zero carbon by 2050," Mr Sharma wrote on Twitter.

"As the first net zero carbon commitment in the Gulf, this is an historic announcement I look to others in the region to also announce ambitious climate action commitments ahead of Cop26."

UAE currency: the story behind the money in your pockets

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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.”

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John Kerry calls UAE’s net-zero initiative an example for other energy-producing nations

UAE plans to invest Dh600 billion in clean and renewable energy sources in the next three decades

UAE currency: the story behind the money in your pockets

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