Institutional investors in the UAE should focus on transition investment to drive both returns and sustainability.
This was the finding from a recently released report by New York University (NYU) Abu Dhabi.
Transition investment is described in the report as an “investment philosophy aimed at achieving socio-economic impact along with financial returns”.
The Transition Investment Lab (TIL) Annual Report 2023 was launched during an NYUAD workshop entitled Powering the Shift to a Sustainable Economy.
It advises that transition investment is critical to overcoming the current financing gap in terms of the UN’s Sustainable Development Goals, a deficit that is estimated to stand at US$4.3 trillion, a doubling of the pre-Covid value.
Furthermore, the report states that institutional investors and sovereign wealth funds in the Mena region are especially well-placed to play a leading role in transition investment.
“At the core of TIL’s beliefs is the notion that long-term institutional investors play a pivotal role in driving change, and SWFs rank high in this echelon due to the vast size of their assets,” said TIL executive director Bernardo Bortolotti.
“Our research showed that sustainable investments by regional SWFs accounted for 19% of total deal value over the 2020-2022 period. It is growing, however, and this is important for filling the SDG financing gap because Middle Eastern investors are much more familiar with those emerging markets.”
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