Trillion-dollar question: How are the world’s biggest asset owners playing the risks ahead?



ImpactAlpha, Nov. 21 – No sooner had we recorded the latest episode of ImpactAlpha’s Returns on Investment podcast than Norway’s trillion-dollar sovereign wealth fund proposed dropping oil and gas companies from its index and its portfolio.

Imogen Rose-Smith called up and graciously agreed to score one for me. In our heated (but always friendly!) roundtable discussion, she had played the role of cautious realist to my more blue-sky forecaster. At issue was the role of the world’s biggest asset owners in the rotation of capital toward sustainability and inclusion.

>> MORE: Trillion-dollar question: How the World’s Biggest Asset Owners Play the Risks Ahead (podcast)

Norway’s move, which could involve divesting about $37 billion worth of stock in Shell, ExxonMobil and other oil and gas companies, came after António Guterres, the secretary-general of the United Nations called for the end of $825 billion in annual investments in fossil fossil fuels and high-emissions sectors. “We must stop making bets on an unsustainable future that will place savings and societies at risk,” he said.

Norway’s move was driven more by diversification away from the oil economy that also supplies most of the country’s wealth. But it was nevertheless taken as a signal by world markets that major asset owners need to hedge against the “risk” of a low-carbon future.

“Let’s come back in a year or two and see whether the supertankers are indeed shifting course,” I challenged Imogen. “Some of these things move very, very slowly until they move very, very quickly. Of course, I could be totally wrong!”

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Special thanks to our podcast producer, Isaac Silk. You can subscribe to all the Returns on Investment podcasts at iTunes, Stitcher or wherever you listen.

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