Today, the International Forum of Sovereign Wealth Funds (IFSWF) and the One Planet Sovereign Wealth Fund Network (OPSWF) are publishing their third annual survey exploring how sovereign wealth funds view and are addressing climate change.
The report draws on a survey and interviews with 40% of the world’s sovereign wealth funds. It provides the only comprehensive account of how these investors understand how climate change will affect their long-term returns and what they are doing to mitigate their impact on the planet.
The main findings of the report are:
- More sovereign wealth funds believe climate change is part of their mandate: In 2022, 91% of respondents said that addressing climate change was consistent with their mandate, while 74% said it was actively part of their mandate.
- More respondents understand the impact of climate change on their bottom lines: The survey has evidence that now 60% of respondents believe that taking climate change into account will improve their long-term returns.
- Greater engagement on the environment: In 2020, half of the respondents said they would engage with portfolio companies on environmental issues. In 2022, this had risen to 65.7%.
- It’s not just talk: Sovereign wealth funds are genuinely taking action to combat climate change and adopting a range of tools to measure, mitigate and manage their impact. For example, carbon footprinting has risen from 23% in 2020 to 51.8% in 2022.
- Sovereign wealth funds expect more accountability: They also expect their asset managers to report on climate change. In 2022, 54% of respondents reported asking their asset managers to outline their approach, and 31% said they requested specific information on climate change.
- Greater transparency: In 2022, they were becoming more transparent and structured in their reporting. The number of sovereign wealth funds claiming they did not report on their climate change strategy decreased from 11 in 2020 and 2021 to only three in 2022.