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Linaburg Talks Climate Change and Institutional Investors at the United Nations

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Photo Credit: United Nations Webcast, webtv.un.org

Photo Credit: United Nations Webcast, webtv.un.org

The leaders of Pacific island nations are voicing their opinion on the negative effects of climate change. Many fear rising sea levels will damage their territorial integrity, economy and livelihood. One of the islands, Kiribati, has one of the oldest sovereign wealth funds in the modern age. UN Secretary-General Ban Ki-moon gave a speech touching on that financing will be essentially to advance the support of small island developing states with regard to climate change. Carl Linaburg, chairman of the Sovereign Wealth Fund Institute (SWFI), spoke at the United Nations on June 29th, during the Small Island Developing States (SIDS) event, to talk about institutional investors and climate change. Carl Linaburg invented the Linaburg-Maduell Transparency Index (LMTI), a way of objectively measuring the transparency of sovereign wealth funds with Michael Maduell in 2008.

However, when focusing specifically on the size of the sovereign investor market, he said, “US$ 7.2 trillion dollars is quite a bit of money that could make an impact on climate change for the better or for the worst.”

Linaburg commented on upcoming regulatory changes regarding investment and climate change being brought down by the European Commission. Linaburg mentioned the European Union (EU) wants to reduce its greenhouse gas emissions by a minimum threshold of 40% by 2030. Globally, pension funds like CalPERS, CalSTRS and Korea’s National Pension Service (NPS) are examining how climate change and regulation related to it could impact their portfolios. In addition, asset managers running massive amounts of capital for pensions and wealth funds are taking notice.

Long-Term Institutional Investors Playing a Large Role Combating Climate Change

The SWFI chairman discussed how sovereign wealth funds, pensions and family offices can play a role in the “grand scheme of things.” Linaburg talked about platforms being formed institutional investors such as sovereign funds, foundations, pensions and other long-term investors looking at green investments. However, when focusing specifically on the size of the sovereign investor market, he said, “US$ 7.2 trillion dollars is quite a bit of money that could make an impact on climate change for the better or for the worst.”

Linaburg highlighted, “Another thing that we need to understand about sovereign wealth funds is that these are, indeed, profit vehicles. They are initially set up to provide for their future economies, and typically they are run by former financial gurus who are good at producing a return on investment. These individuals have a lot of pressure not only from their governmental owners but also from the public to produce a positive return on their portfolios. The key to approaching sovereign wealth funds with initiatives like climate change is finding a middle ground.”

He mentioned the growing movement of the Portfolio Decarbonisation Coalition, taking a strong foothold in Europe. This coalition was founded by Amundi, AP4, CDP and the United Nations Environment Programme Finance Initiative. It is a multi-stakeholder initiative that aims to drive greenhouse gas emissions down by assembling institutional investors to gradually embrace the decarbonisation of their portfolios. Linaburg spoke about hearing the speech of Mats Andersson, CEO of AP4, at the SWFI’s Institute Fund Summit 2015 conference in Seoul in April, talk about the buffer fund’s approach on becoming a low-carbon institutional investor.

Sovereign wealth funds are gradually playing a bigger role in the green investment world. Norway’s Government Pension Fund Global has made allocations to environmental investment mandates, while funds like the New Zealand Superannuation Fund (NZSF) have made direct investments in companies like Bloom Energy. According to the SWFI’s Sovereign Wealth Fund Transaction Database, even Gulf funds like Mubadala and the China Investment Corporation have made big bets in renewables.

ADIA Seeks to Sell KIC Headquarters

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The Abu Dhabi Investment Authority (ADIA) is seeking to sell the building that houses the headquarters of the Korea Investment Corporation (KIC). [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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BMO and OTPP Test Blockchain Canadian Dollar Debt Deal

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The Bank of Montreal (BMO) and the Ontario Teachers’ Pension Plan (OTPP) participated in a landmark blockchain Canadian-dollar debt transaction. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Just Group Acquires Corinthian Pension Consulting

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Just Group plc acquired a 75% ownership stake in the holding company of Corinthian Pension Consulting Limited (Corinthian Pension Consulting). Operating in the institutional world for over 12 years, Corinthian Pension Consulting provides advisory services to defined-benefit pension scheme trustees and scheme sponsors undertaking bulk scheme exercises. The remaining 25% will be retained by current shareholders of Corinthian Pension Consulting. Robert MacGregor will continue to lead Corinthian Pension Consulting, as its Chief Executive Officer. Furthermore, Corinthian Benefits Consulting Limited and Corinthian Affinity Solutions Limited will continue to operate as before, becoming part of a newly formed holding company, Corinthian Group Holdings Limited.

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