Sovereign Wealth Funds Adopt More Tools to Monitor Climate Impact

Carbon footprinting and climate scenario analysis are among several methods SWFs now use, a survey finds.


Sovereign wealth funds, many of them committed to combatting climate change, are now employing more sophisticated means of measuring their impact on the environment, a survey of 48 SWFs indicated.

SWFs also now demonstrate “increased sophistication in climate finance,” according to the study by the International Forum of Sovereign Wealth Funds and the One Planet Sovereign Wealth Funds Network, their fourth such poll. The latest version was conducted in 2023 and released this week.

For instance, the funds used to flock into private asset classes dedicated to green themes, such as private markets and real estate, considering these investment sectors easier to influence, the report stated. Only about one-third of them listed climate-related investments in publicly traded assets.

Now, however, SWFs are entering public assets such as stocks, which they had avoided out of fear about equities’ relative volatility. Take renewable energy stocks, which suffered with rising interest rates that began in 2022. Lately, 53% of the funds reported investing in these equities. Renewable energy shares have seen their prices dip and thus offer good entry points for investors, the report contended.

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Among the funds’ new techniques: adopting carbon footprinting, which tracks how much greenhouse gas an activity is producing, and climate scenario analysis, which gauges how much climate risks affect the financial health of institutions and the overall financial system.

At the same time, SWFs are more “interested in different climate financing instruments and safeguards” than before, the study noted. It pointed to increased use of catastrophe insurance. This coverage “acts as a portfolio diversifier because it is negatively correlated to equity markets,” the study concluded—presumably as portfolio insurance. So when natural disasters and other such events harm stock markets, insurance payouts offset policyholders’ equity losses.  

More and more, SWFs (77% in the latest survey, up from 70% the year before) are requiring that asset managers outline how they are approaching climate change investing. By doing this, the study declared, “sovereign wealth funds are playing their role in holding their asset managers accountable for their climate impact and making a contribution to protecting the industry against greenwashing,” which occurs when entities make misleading claims about environmental benefits.

Africa is “an increasingly attractive geography for sovereign wealth funds to look for climate change solutions,” the report advised. While that continent is “challenging and unfamiliar” to SWFs, the study found that the funds are “working on understanding these new markets.”

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Plan to Replace Mississippi PERS Board With Political Appointees Dies in Committee

A bill already passed by the Mississippi House would have replaced the current board, which public employees elect, amid controversy over increased pension fund contributions.



A measure to replace the current member-elected board of the Public Employees’ Retirement System of Mississippi with one appointed mostly by state officials failed to advance from a Mississippi Senate committee on Tuesday. The Mississippi Legislature website lists the bill’s disposition as “dead.”

House Bill 1590, passed by the Mississippi House of Representatives on March 13, faced a Tuesday deadline for action in the Mississippi Senate Government Structure Committee, but Chairman Chris Johnson did not call the bill up for consideration. Mississippi House of Representatives Speaker Jason White, in a statement, labeled the decision “irresponsible.”

HB 1590 would have replaced the 10-member PERS board with an 11-person panel made up of four members appointed by the Mississippi governor, three by the lieutenant governor, two by PERS membership, the state treasurer and the state commissioner of revenue (who is also appointed by the governor).

Currently, the board is made up of 10 board members, eight of whom are elected by PERS membership. The board, in a statement released in March, portrayed the bill as an “attempt to politicize the PERS board.”

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The measure was intended to overturn the current board’s plan to increase the fixed employer contribution rate to the PERS pension fund to 22.4% from 17.4% over three years, with the potential for further increases as high as 27.4% by July 2028.

PERS manages $31.6 billion in assets as of fiscal 2023, which ended on June 30, 2023. PERS had a funded status of 56.1% at the end of the fiscal year, a decrease from 61.3% the prior fiscal year. According to PERS, there are 300,000 beneficiaries of the system, roughly 10% of Mississippi’s population.

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