The empire’s public investment fund is investing more in businesses that have benefited from the move away from fossil fuels, reflecting Saudi Arabia’s broader strategy to diversify its economy away from relying on crude sales.
Saudi Arabia’s 4 40 billion sovereign wealth fund plans to issue its first green debt as it seeks to increase the role of environmental, social and governance policies in its investments.
The Public Investment Fund will announce the green issue “soon,” Governor Yasser al-Rumayan said at a virtual event on Tuesday. PIF, also known as the fund, is working with BlackRock Inc. to build an ESG structure, said Al-Rumayan, who is also chairman of Saudi Aramco, the world’s largest oil company.
An increase in global sales, which broke the record for the debut of the UK’s green bonds this week, looks set to push moral debt to 1 1 trillion. A green orrow by PIF would be the first to fund a sovereign asset and seek to reshape its reputation on environmental issues, one of the world’s largest oil exporters.
The government is set to announce details of its own environmental plan at a conference next month. In September, the Ministry of Finance has already appointed HSBC Holdings plc and JP Morgan Chase & Co. as joint structural agents for its sustainability financing structure.
“We are working with many partners around the world, domestically and internationally, to get better ESG compliance for what we do,” Al-Rumayan said. He said that as part of building its own ESG structure, PIF wanted to move “slowly” towards rejecting investments that lacked its own sustainable plan.
PIF is investing more in businesses that have benefited from the shift away from fossil fuels, reflecting the state’s broader strategy to diversify its economy from reliance on crude sales. It has expanded its partnership with Saudi manufacturer ACWA Power International, which is spending heavily on renewable energy from solar to hydrogen, and has invested in electric vehicle maker Lucid.
Saudi companies, meanwhile, scrutinize other sovereign investors. Norway’s finance ministry has decided that imperial-based companies should not be part of the criteria used in its asset funding, according to a white paper published last April, which aimed to impose more ethical and environmental standards across its investments.
The state plans to establish a regional exchange for trading carbon credits and offsets as it seeks to encourage efforts to reduce harmful emissions.
PIF is partnering with the Saudi Stock Exchange to establish the Riyadh Voluntary Exchange Platform earlier this month. The exchange will allow carbon credits and offset trading across the Middle East and North Africa.
Although the details of the exchange are very few, and the statement did not specify when the trading platform will start or give details of how it will work.
According to Reuters, PIF has appointed five international banks as members of an ESG panel for its medium-term capital raising strategy. Saudi Arabia’s wealth fund has previously borrowed from the World Bank, recently raising ১৫ 15 billion from 15 donors that it plans to use to finance the new deal.