A report released by the International Forum of Sovereign Wealth Funds (IFSWF) on Tuesday, May 11, 2021, revealed that more sovereign funds are investing in the fight against climate change as well as in doubling down on technology.
In total, the national wealth custodians have invested a total of $2.3 billion in 2020 alone. Apart from climate change, these investments have been allocated to addressing concerns regarding agricultural technology (agritech), forestry, and renewable energy.
The $2.3 billion investments made by the sovereign wealth heads have more than doubled compared to 2019’s investments, with the latter seeing only $1.1 billion in investments in 2019 for climate-related portfolio investments, reports Bloomberg.
According to Bloomberg, the emphasis on battling climate change comes as the increasing pressure towards stopping the effects of global warming has come to light, with studies showing that only around 30% of sovereign funds have agreed to allocate over 10% of their funding towards climate-related aspects in their portfolios.
In a statement, the chief executive officer of Korea Investment Corp. Heenam Choi said, “Over the next 10 years, the best investment opportunities will be in climate change and related technologies. The pandemic highlighted the importance of sustainability. We will continue to expand our ESG investments.”
Bloomberg states that although sovereign wealth funds are not quick to set the trends in the industry, technologies that aid in the recovery and adaptation of economies affected by climate change, as well as those developments that reduce carbon emissions, have become more prominent and popular investment trends in the past number of years.
Given the trend and the improvement in technological advances in the field, Bloomberg maintains that more sovereign investors are looking to invest in these renewable energy assets. This can be chalked up to the profits that these technologies and assets bring to the table without requiring too much financial assistance from the government.
Based on its report, the IFSWF said that investors are also looking to boost the agritech sector as they attempt to reduce the impact of food production on the environment.