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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.

CDPQ Supports Domestic AI Fund

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Institutional investor Caisse de dépôt et placement du Québec (CDPQ), which works primarily on behalf of pension funds and insurance plans, is opening a new fund dedicated to Québec businesses that specialize in AI, or artificial intelligence. Available funds are slated at US$ 250 million for the enterprise. The commercialization of AI seems to be a natural fit for CDPQ, “Since Montréal is emerging as a global beacon of excellence in artificial intelligence, we need to enhance our offering and ramp up the financial and development support we provide AI businesses through the various stages of their growth,” according to Executive Vice President of Quebec and Global Strategy, Charles Émond. Émond aspires to see AI spread throughout “all sectors of our economy.” The AI fund will be run by CDPQ’s Venture Capital and Technology team. They will look for companies that are already doing well in the sector.

Another program is targeting early stage organizations. Mila Quebec AI Institute, a research and development organization founded by three universities, is building a new complex to help facilitate CDPQ’s goals. The new complex will house early-stage AI companies. CDPQ is especially interested in companies that can accelerate their growth and enter markets quickly, providing speedy returns. There is a social component, whereby companies will be required to contribute to Mila. Michael Sabia, President and Chief Executive Officer of CDPQ, noted, “With this partnership, la Caisse is pursuing its commitment to helping Québec businesses in this new economy thrive and expand.”

Keywords: Caisse de depot et placement du Quebec

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RDIF and Aggreko Reveal Strategic Partnership on Microgrids

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The Russian Direct Investment Fund (RDIF) and Glasgow-based Aggreko plc, a listed company that provides power, heating and cooling, signed a deal to cooperate on the development of microgrids. The parties plan to invest in the construction of facilities that will provide uninterrupted power supply and temperature control to industrial enterprises and utilities in the Russian regions. Aggreko operates one of its 6 global hubs in Tyumen, Western Siberia, through an entity called Aggreko Evraziya, OOO. In 2017, Aggreko plc acquired Younicos, a company specialized in the development of modular batteries and Microgrids control solutions.

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China and Russia Buy Up More Physical Gold

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The worst fears of the Federal Reserve may be coming true. The barbarous relic is once again offering some resistance to Fed policy as it maintains its uptrend from mid-November, and is being snapped up from central banks worldwide. Former Fed chairman Paul Volcker shared the central bank view that “Gold was the enemy.” If so, the enemy is gaining ground. China’s gold reserves quietly grew from December 2018 to February 2019. The People’s Bank of China disclosed in February 2019 that it increased its gold reserves by 10 tonnes that month, following purchases of 11.8 tonnes in January 2019, and 9.95 tonnes in December 2018. Goldman Sachs has listed central bank purchasing as the reason for the uptrend. Goldman Sachs expects to see gold at US$ 1,400 over the next six months, which would lift it well above its long-held resistance at US$ 1,350. China’s gold holdings are now US$ 79.5 billion. China, which is emphasizing diversification from the U.S. dollar, has been a fan of precious metals for years, and it has been encouraging its citizens to purchase gold and silver for a decade, when previous controls on precious metals were done away with. Now anyone in China can trade gold internationally with the swipe of a card.

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