Emirates News Agency – Middle East can drive sustainable change through ‘transformation investing’ strategy, NYU Abu Dhabi report

ABU DHABI, 22nd May, 2023 (WAM) — Institutional investors in the UAE should embrace transformational investing as a new concept, leveraging its unique access to emerging markets, according to the latest news from New York University Abu Dhabi, NYUAD , Furthering the achievement of the United Nations Social Development Goals Transformational Investment Laboratory (TIL) Annual Report 2023. The report was released during a symposium titled Driving the transition to a sustainable economy.
Hosted by TIL in partnership with Mubadala and Al Maskari Holding, participants concluded that transformational investing is an investment philosophy aimed at achieving socio-economic impact and financial return that can have a significant impact on the global economy and the region. Transformational investing enables the shift to new economic models based on environmental sustainability, social inclusion and shared prosperity by unlocking the capital of large institutional investors into transformational projects.
According to the report, this form of investment is critical to overcoming the current global “multiple crises” – multiple, interconnected challenges occurring at the same time that exacerbate each other, making them more difficult to address and resolve. Multiple crises have had a devastating “scissors effect” on the investment gap – the difference between the amount of financial resources required each year to achieve the United Nations (UN) Sustainable Development Goals (SDGs) by 2030 and the amount of current investment.
According to UNCTAD, the shortfall is now $4.3 trillion per year, double its pre-COVID-19 value. However, the OECD estimates that global financial assets will reach US$469 trillion in 2020, meaning that the estimated US$30 trillion SDG financing gap in emerging markets over the next seven years accounts for less than 6% of global private capital. The Transformative Investing workshop discussed potential ways to unlock large-scale capital deployment and found the Middle East to be particularly well placed to play a leading role.
Bernardo Bortolotti, Executive Director of TIL, commented: “At the heart of TIL’s beliefs is the notion that long-term institutional investors play a key role in driving change, with sovereign wealth funds (SWFs) ranking high in this echelon due to the size of their assets. Our research shows that sustainable investing by regional sovereign wealth funds accounted for 19% of total deal value over the period 2020-2022. However, it is growing and will be important in bridging the financing gap for the SDGs as investors in the Middle East These emerging markets are more familiar.”
Bortolotti added: “One of the main barriers preventing institutional investors from investing is the lack of high-quality data to demonstrate the effectiveness of impact investment interventions. To this end, TIL has developed a Signature Impact Framework (SIF), Impact provides a means and represents the precise and unique contribution a business can make to social good.”
Derek Rozycki, Head of Investments at Mubadala said: “Mubadala is a strong supporter of the Transformational Investment Lab and NYU. We have been working with our partners in the One Planet sovereign wealth fund network to improve the availability of private market climate data. Today The report highlights the need for data to inform decision-making so that sovereign wealth funds can play a role in helping to find solutions to global challenges.”
Peter Lejre, Advisor to Al Maskari Holding and CEO of MEASA Partners, said: “We are very excited about the work TIL is doing and remain committed to supporting the program for years to come. Seeing the convening power of TIL events is a testament to the initiative relevance – not only for us, but for stakeholders in the UAE and around the world.”
The Transformative Investing Symposium brings together financial institutions, asset managers, researchers and policymakers to exchange knowledge and best practice for large-scale investments in social impact projects in emerging and low-income countries. The event agenda is also aligned with the upcoming COP28, which will be hosted by the UAE in autumn 2023.
TIL’s mission to produce high-quality academic research in support of NYUAD’s and Abu Dhabi’s positioning as a knowledge hub for investing in alignment with the 2030 Agenda for Sustainable Development informs NYUAD’s global vision.