Thu, Sep 06, 2018 page10

• Norway’s fund to beef up scrutiny of sustainability

  SOVEREIGN WEALTH: The Norwegian fund’s manager said it is demanding firms help protect the oceans, while Saudi Arabia’s PIF is focusing on big-ticket investments

  • Reuters, OSLO
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  Norway’s US$1 trillion sovereign wealth fund is to demand that companies in which it invests follow stricter guidelines on global sustainability, including efforts to combat plastic pollution of the oceans, the fund’s manager said yesterday.

  The fund’s ambitions as an investor significantly overlap with the UN’s Sustainable Development Goals, which aim to achieve sustainable economic, social and environmental development by 2030, it said in a statement.

  “Our most important contribution is to strengthen governance, improve performance and promote sustainable business practices,” chief executive Yngve Slyngstad said in a statement.

  “We invest in developing markets and in companies developing solutions for a more environmentally friendly economy. Finally, we divest from companies with unsustainable business models,” he added.

  Among its demands, the fund is to require that companies better protect the oceans.

  “We expect companies to manage the challenges and opportunities related to sustainable use of the ocean,” Slyngstad said.

  “Examples of relevant sectors include ocean-based industries, such as shipping, wild-catch fisheries and aquaculture, but also retail, the value chain of plastic products and agricultural goods,” he said.

  The Norwegian sovereign wealth fund is the world’s largest by asset value, holding stakes in more than 9,000 companies in 72 countries, in addition to a fixed-income portfolio and direct stakes in real estate.

  Norges Bank Investment Management, a unit of the Norwegian central bank, also said it had appointed three outside advisers to strengthen its work on corporate governance issues.

  In other news, Saudi Arabia is scrambling to boost the coffers of its Public Investment Fund (PIF) through a slew of non-oil investments — from risky high-tech start-ups to a new mega city.

  The PIF, which aims to raise its assets from about US$230 billion to more than US$2 trillion by 2030, is aggressively pushing a host of big-ticket investments — from Uber Technologies Inc to the planned US$500 billion NEOM mega city on the Red Sea coast.

  The fund has also invested in British tycoon Richard Branson’s space tourism company Virgin Galactic and pledged tens of billions of US dollars to funds run by Softbank Group Corp and Blackstone Group LP.

  However, some analysts have voiced concern over the PIF’s “spend to grow” strategy as it pursues what are seen as flashy deals rather than long-term investments that deliver secure returns and generate jobs as unemployment soars.

  “The PIF’s pattern of investment very much resembles that of a venture capital fund and that is concerning for a fund that will, by necessity, have to generate steady returns in the long run,” said Ellen Wald, author of the book Saudi Inc.

  Since 2016, the PIF has made external investment commitments worth 360 billion riyals (US$95 billion), according to the IMF, including stakes in high-risk tech firms such as Tesla Inc.

  “Investments in technology companies will not transform Saudi Arabia’s economy nor will they diversify the economy’s sources of revenue away from oil,” Wald said.

  Additional reporting by AFP
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