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Climate, Energy Transition Top Priorities for Sovereign Wealth Funds 

Following a year of negative returns, Invesco’s 11th annual global sovereign asset management study has found that sovereign wealth funds (SWFs) intend to enhance their focus on funding the energy transition (53%) and solutions to mitigate the effects of climate change (66%). In particular, within infrastructure, there is “considerable interest” in renewable energy generation, the report said, with 81% of SWF respondents seeing this as an attractive area of investment. Further, 65% cited interest in energy transmission and supply infrastructure. The report said interest in these areas has been promoted by the global surge in renewable infrastructure demand, as well as Russia’s invasion of Ukraine and the resulting energy security crisis. Social objectives, such as health and education, were identified as important by 57% of respondents. Rod Ringrow, Head of Official Institutions at Invesco, said: “With the energy transition taking precedence, we see sovereign investors concentrating more on green infrastructure and green bonds. Those sovereigns with extended investment horizons are increasingly considering direct investments in green infrastructure as a means of maximising impact. In particular, investment, liability, and development SWFs all deem ‘direct investment in green infrastructure’ as the most crucial method for financing the energy transition.

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