LONDON/DUBAI, Dec 6 (Reuters) – Sovereign wealth funds that control nearly $12 trillion in assets are unlikely to quickly dismantle the hurdles in the way of urgently needed increases to their climate investments, even as COP28 talks seek to close the funding gap.

Funds such as those of Norway and the United Arab Emirates, COP28 host, face obstacles including mandates that require predictable returns that make it hard to find enough sustainable projects in which they can invest.

So far sovereign wealth funds, the largest of which are sustained by oil, have committed less than $10 billion to the climate cause, even though a dozen interviews with sovereign wealth funds and analysts who track them showed that funds, big and small, are increasingly concerned with the energy transition.

“I’m not seeing wide-ranging investment strategy against climate change in funds around the world,” said Bernardo Bortolotti, director of the Sovereign Investment Lab at Bocconi University in Milan. “With the notable exception of Singapore and New Zealand, the commitments so far have been lackluster, accounting for less than 5% of total sustainable investments.”

Some smaller funds, such as those in Nigeria and Bahrain, are boosting renewables or carbon offsetting, while a survey published in November showed more than a third of public funds planned to increase allocations to green bonds and assets.

But the outright level of cash that sovereign wealth funds have put towards renewable energy and other sustainable investments has stagnated.

Research by the Center for the Governance of Change at Spain’s IE University tallied global sovereign wealth funds’ sustainable investments – everything from renewable energy to recycling and sustainable agriculture – at $9.3 billion last year – below the 2018 peak of $9.6 billion.

https://www.reuters.com/sustainability/sustainable-finance-reporting/sovereign-wealth-funds-struggle-turn-their-trillions-climate-finance-2023-12-06/