Thursday, October 28

Saudi ESG Enigma Doesn’t Add Up for Some Investors

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(Bloomberg) — Some investors find it difficult to reconcile Saudi Arabia’s record on climate with its plans for sustainable financing, even if it moving faster than others in its energy transition, a senior portfolio manager at BlueBay Asset Management said.

The world’s largest crude exporter is planning green bonds, tapping into a booming global market for finance that complies with environmental, social and governance, or ESG, goals. This comes as governments worldwide step up efforts to prevent temperatures from rising more than 1.5 degrees Celsius above pre-industrial levels.

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Read More: Saudi Arabia Eyes Green Bond in 2022 as Sustainable Debt Soars

“I don’t think I can name any other country in emerging markets that has moved at a similar pace, and this is really encouraging,” Polina Kurdyavko, Head of Emerging Market Debt at Bluebay, told an investment conference in Riyadh where officials discussed the green bond plans.

At the same time, Bluebay’s clients question Saudi Arabia’s commitments to combat climate change, she said.

“Saudi Arabia ranks among the countries that are’critically insufficient’ in terms of the program set forward in order to deliver the 1.5 degree target,” she said, appearing to cite its ranking by non-profit Climate Action Tracker that gives the kingdom the lowest level possible for its climate policies.

“For us as investors it’s very difficult to reconcile those two points,” Kurdyavko said, calling on the government to help institutions explain the gap to their clients. “That would make our job a lot easier and would make the issuers of the country pay much lower rates.”

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