Wealth comes with responsibility. This idea is becoming more and more prevalent in investment decisions. Green investments are also experiencing a boom among private individuals worldwide – especially since future technologies such as climate-neutral energy sources are often highly profitable. However, China’s multi-billion dollar sovereign wealth funds are not quite getting on board yet, even though greater sustainability is now something of a state goal. Nico Beckert analyses the reasons for the sovereign wealth funds’ reluctance to act on green investments.
The Western cosmetics industry will find it much easier to offer its products on the Chinese market in the future. This is because the government has overturned the requirement for animal testing, which was previously a high hurdle. Frank Sieren explains why China has found it so difficult to dispense with the controversial testing on animals, despite being very technology-friendly.
Huawei is leaving its dependence on Google behind and launching its own mobile operating system next week. The electronics company is forced to disconnect itself from the lively world of Android apps. But perhaps the homegrown product will be a hit in China – and the Americans will lose out in the end.
As the workbench of the world, China has accumulated massive currency reserves through its exports in recent decades. The sums in the hands of Chinese sovereign wealth funds now even exceed the budgets of large countries like the UK or Italy. Anyone who invests so much capital plays a decisive role in shaping events on the planet. The investment priorities of the SWFs are, therefore, of great interest to sustainability experts – and they do not give them a good report card.
Even China’s largest sovereign wealth fund, the China Investment Corporation (CIC), “does not make significant environmental and sustainability considerations in its investment process,” say experts at the Climate Policy Initiative think tank. Neither the major funds nor China’s central bank publish data on green investments. There is also a lack of climate strategies.
China’s foreign reserves are essentially in three sovereign wealth funds, which are among the largest in the world:
In April, China’s central bank chief Yi Gang announced that, in investing these immense foreign exchange reserves, he would “further increase the share of green bonds, limit investment in carbon-intensive assets.” But this statement seems more like a promise for the future. To be sure, CIC sees itself as a “responsible investor” that fulfills “its social responsibility.” In its latest annual report, the fund writes that it is “committed to green development” – but the authors do not go into detail. At the same time, the fund says it pursues the goal of “maximum return.” Asked whether his fund would invest in green technologies, the Chairman of the CIC’s supervisory board said: “We will not do this as a subsidy, but only if the sector yields a profit.”
To be sure, the fund does invest in green assets. In 2019, it poured $400 million into Asia’s largest wind energy company, China Longyuan Power Group, according to Reuters. CIC also poured $700 million into power plant operator GCL-Poly Energy, which is looking to expand its solar sector. At the same time, however, CIC is in talks with Saudi Aramco to acquire a one percent stake in the world’s largest oil production company. The estimated cost: $19 billion.
It looks as if the funds are finding it difficult to change course – after all, just a few years ago, one of their core tasks was to secure their country’s access to raw fossilized materials. At the beginning of the 2010s, the CIC thus invested heavily in oil and gas projects. This includes, for example, the particularly environmentally unfriendly extraction from oil sands. To this end, the fund acquired a 7.4 percent stake in Sunshine Oilsands from Canada, which it still holds today. The CIC lent almost $2 billion to Bumi Resources, the world’s third-largest coal exporter. Investments in such energy projects were considered “lower-risk investments” because they yielded “steady returns.” At the time, the Chinese government focused on energy security in investments to meet the country’s development needs.
Javier Capapé Aguilar, an expert on sovereign wealth funds and former advisor to the United Nations, suspects that China’s largest sovereign wealth fund will align its investments more closely with Beijing’s current industrial policy in the future. Specifically, this means bringing more foreign technologies to China. Since green technologies play a significant role in Beijing’s industrial policy, the CIC could invest more funds in this area in the future.
China’s sovereign wealth funds are no exception regarding the lack of green investments in international comparison. “On average less than 1 percent of sovereign funds’ investments go to low-carbon solutions,” an OECD study shows. Few funds publish information on their climate strategies. And they rarely push companies in which they hold stakes to make climate-friendly management decisions at annual general meetings. SWFs generally rarely influence the business of their respective companies, the OECD says.
According to Javier Capapé Aguilar, there are several reasons why sovereign wealth funds are not yet diverting more money into green investments. Firstly, the funds are unsure whether green investments yield sufficiently high returns, Aguilar says. The goal of the funds is to invest the foreign exchange reserves of the country in question in a way that preserves them for future generations. Because of this safe investments were often preferred in the past. In the near future, however, there could be a change in thinking. Investments in fossil energies and industries could soon turn out to be stranded assets and lose value. To meet climate targets, for example, much of the oil will have to remain in the ground. Investments in companies in this sector could lose massive value in the future.
Green investments come at a cost to SWFs, according to Aguilar. He says it is considered too costly to check whether certain companies and infrastructure investments are really green. Disclosure requirements, such as those adopted by the EU, could provide more transparency and lower costs.
Governments are also rarely encouraging their SWFs to invest more in green assets, Aguilar said. The OECD considers it “unlikely that SWFs will take climate-related measures on their own initiative.” It remains to be seen whether China’s central bank will back up its words with action. Mathias Lund Larsen of the International Institute of Green Finance says, “As is so often the case in Chinese politics, there is no transparency on how the allocation of foreign exchange reserves to green assets will be increased.” He doesn’t expect details for a few months.
The sovereign wealth funds of Norway and New Zealand show that there is another way. The two funds have integrated climate risks into their investment processes. Norway, for example, has withdrawn investments from over 150 oil, gas and coal companies and instead invested in companies from the renewable energy sector.
The interest in the origins of the Covid pandemic is understandable. An event that has so far claimed the lives of 3.5 million people has left many patients with physical and psychological sequelae, demands billions of euros and enormous efforts from states and companies on a daily basis – something like this demands clarification. The need for an understandable cause that goes beyond the random occurrence of a natural phenomenon is correspondingly great. But what are we to make of headlines such as: “New evidence for the hypothesis that Sars-CoV-2 originated in the laboratory“? Focus Online originally even texted of the “virus originated in the lab,” but changed the headline on Tuesday to: “Where did Covid come from? Sudden illness of laboratory employees raises new questions.”
The Berliner Tagesspiegel, well-informed on Covid issues, also currently fed the assumption that the virus came from the laboratory. The paper contrasts a statement by the World Health Organization (WHO) with a US intelligence report: the virus has jumped from a bat to humans, says the WHO – it escaped from the laboratory, say the Americans.
Underlying all of this, however, is primarily some confusion about the meaning of the word “origin.” There is virtually no dispute among serious scientists: Respiratory Covid viruses jump back and forth between mammalian species. Sars-CoV-2 has also almost certainly passed from animals to humans. It then began its spread around the globe from patient 0.
However, it is completely unclear who patient 0 was and when and where they became infected. We will probably never know because something like this can only be reconstructed in retrospect with a great deal of luck. Therefore, the thesis that the initial infection occurred in a laboratory is not completely outlandish. After all, the Wuhan Institute of Virology (WIV) has systematically studied bat viruses. Careless handling of a sample may well have led to the infection of an employee. So far, however, any real evidence to support the theory is lacking. The fact that several researchers contracted a severe respiratory infection in November in smog-polluted Wuhan is, at best, an indication but no proof.
When the WHO talks about the “origin” of the pathogen in a laboratory being almost impossible, it means: The virus was not artificially created molecule by molecule, for example, to develop a new bio-weapon. Rather, it evolved in the bat, like so many other viruses. The finding leaves the question of how it got from the bat to man unanswered. Was a farmer patient 0? Did the virus get to humans via intermediate hosts in a wildlife market? (This assumption has now been largely disproved.) Did the event occur when mink were being bred? Or just without intermediate hosts at all in the lab? There are myriad possibilities.
So both theses can be true. The origin of the pathogen was in the wild, but the beginning of the chain of infection was a laboratory accident. However, China could just as well admit this since there is nothing wrong with the task of the WIV: It is supposed to research dangerous viruses and warn about them in time (China.Table reported). On the other hand, it fits the behavioral patterns of the communist state to deal with failures even less transparently than open societies.
A US intelligence investigation pushed by Donald Trump, of all people, is not necessarily the most reputable source here. Meanwhile, scientists are also puzzled by some characteristics of Sars-CoV-2 that point to laboratory experiments as intermediate steps between origin and transition to humans. Although the virus originated in bats, it was better adapted to humans than to bats from the beginning. It also possessed a genetic trait that distinguished it from its wild relatives and made it highly contagious, especially to humans.
However, virologist Christian Drosten of Berlin’s Charité hospital, a global authority on Covid viruses long before the pandemic, considers such rumors to be of little importance. The situation is “under-sampled”, says Drosten. What he means is that we simply lack a virus sample from the missing links between bats and humans.
Drosten’s comparison: “We want to know whether the dolphin is related to the cow. But we’ve never studied a cow, only horses and camels and sometimes a mouse.” While this gives rise to all sorts of speculation, it only allows the relationship between the two species to be inferred indirectly at best – and it doesn’t produce a robust statement about the cow-dolphin connection. “We’re fishing pretty hard in an under-sampled situation,” Drosten says.
So, for the time being, the findings of the present WHO report remain. The virus probably comes from a bat via an unknown intermediate host and has spread undetected among humans for a while (China.Table reported). During this time, it may have adapted to humans, explaining the differences with bat viruses. In any case, Christian Drosten relegates the horror lab stories to the realm of conspiracy theories for now. He warns, “In evolutionary biology, you can rarely prove anything.” And even the current US President Joe Biden wants to wait for a more objective investigation before he commits himself.
The Chinese telecommunications giant Huawei has been the subject of criticism for several years. Expert politicians have considerable security concerns about involving Huawei in the construction of the 5G networks in Germany and Europe. According to experts as well as representatives of Telekom and Vodafone, this development would be almost impossible without Huawei if the Europeans do not want to lose time unnecessarily.
In Germany, one man thus quickly found himself in the political crossfire: David Wang Chengdong. He is Huawei’s Chief Representative in Germany and, as such, represents Huawei in its external relations with politics, the media, academia, and associations. Just like many of his colleagues, as a Chinese expat he is a wanderer between two worlds. On the one hand, he has to report regularly to the company’s top management in Shenzhen, and on the other hand, he has to seek close contact with political and economic representatives in Germany. His rhetoric in Berlin circles is usually characterized by diplomacy.
But given the constant accusations and insinuations against Huawei, which according to critics in the deployment of 5G networks, could possibly tap critical data and transmit it to China or even install a kind of “kill switch” for the network, David Wang also became visibly more belligerent last year. “We’ve been active in Germany for 15 years now and none of our long-standing customers have found any evidence of misuse of our technologies. Even the US has no evidence of that, zero,” Wang told Der Spiegel.
After graduating from Northern Jiaotong University in Beijing, he began his career at Huawei in 1998. Since then, he has worked in Singapore, the Philippines, Malaysia, and Australia, among other places. From 2015 to 2018, David Wang was the Head of Huawei’s branch office in the United Arab Emirates. Subsequently, he took over the post of Chief Representative in Germany. He speaks of a “drama” that is unfolding in light of the heavy politicization around 5G deployment and expansion. In public, Wang usually plays the cool and rational market economist, whose credo is that only competition among providers can ensure the best security. In background interviews, he also emphasizes that it would be fatal for Huawei if the company were to steal data or otherwise abuse the trust of customers and governments.
Despite David Wang’s communicative efforts, the shadow of the company’s headquarters in Shenzhen is long. Huawei is partly run by ex-military men – including founder Ren Zhengfei – who use language that is too military for Europeans. Wang always tries to counter accusations of closeness to the state with Huawei’s origins and current corporate structure. “Huawei is still fully privately owned and virtually owned by its employees. In total, Huawei employs nearly 200,000 people, about half of whom hold shares in the company,” Wang argues. “There is no one else holding shares in Huawei, including the state.”
Despite these words, David Wang knows that Germans and Europeans will continue to view the company with skepticism when it comes to IT security. The fear of Beijing’s influence is too great. And so, the telecommunications expert will have to continue to act as a diplomat in Berlin. Constantin Eckner
They’d better not be scared of heights! Technicians check high-voltage power lines in Zhoushan, East China’s Zhejiang province.
Wealth comes with responsibility. This idea is becoming more and more prevalent in investment decisions. Green investments are also experiencing a boom among private individuals worldwide – especially since future technologies such as climate-neutral energy sources are often highly profitable. However, China’s multi-billion dollar sovereign wealth funds are not quite getting on board yet, even though greater sustainability is now something of a state goal. Nico Beckert analyses the reasons for the sovereign wealth funds’ reluctance to act on green investments.
The Western cosmetics industry will find it much easier to offer its products on the Chinese market in the future. This is because the government has overturned the requirement for animal testing, which was previously a high hurdle. Frank Sieren explains why China has found it so difficult to dispense with the controversial testing on animals, despite being very technology-friendly.
Huawei is leaving its dependence on Google behind and launching its own mobile operating system next week. The electronics company is forced to disconnect itself from the lively world of Android apps. But perhaps the homegrown product will be a hit in China – and the Americans will lose out in the end.
As the workbench of the world, China has accumulated massive currency reserves through its exports in recent decades. The sums in the hands of Chinese sovereign wealth funds now even exceed the budgets of large countries like the UK or Italy. Anyone who invests so much capital plays a decisive role in shaping events on the planet. The investment priorities of the SWFs are, therefore, of great interest to sustainability experts – and they do not give them a good report card.
Even China’s largest sovereign wealth fund, the China Investment Corporation (CIC), “does not make significant environmental and sustainability considerations in its investment process,” say experts at the Climate Policy Initiative think tank. Neither the major funds nor China’s central bank publish data on green investments. There is also a lack of climate strategies.
China’s foreign reserves are essentially in three sovereign wealth funds, which are among the largest in the world:
In April, China’s central bank chief Yi Gang announced that, in investing these immense foreign exchange reserves, he would “further increase the share of green bonds, limit investment in carbon-intensive assets.” But this statement seems more like a promise for the future. To be sure, CIC sees itself as a “responsible investor” that fulfills “its social responsibility.” In its latest annual report, the fund writes that it is “committed to green development” – but the authors do not go into detail. At the same time, the fund says it pursues the goal of “maximum return.” Asked whether his fund would invest in green technologies, the Chairman of the CIC’s supervisory board said: “We will not do this as a subsidy, but only if the sector yields a profit.”
To be sure, the fund does invest in green assets. In 2019, it poured $400 million into Asia’s largest wind energy company, China Longyuan Power Group, according to Reuters. CIC also poured $700 million into power plant operator GCL-Poly Energy, which is looking to expand its solar sector. At the same time, however, CIC is in talks with Saudi Aramco to acquire a one percent stake in the world’s largest oil production company. The estimated cost: $19 billion.
It looks as if the funds are finding it difficult to change course – after all, just a few years ago, one of their core tasks was to secure their country’s access to raw fossilized materials. At the beginning of the 2010s, the CIC thus invested heavily in oil and gas projects. This includes, for example, the particularly environmentally unfriendly extraction from oil sands. To this end, the fund acquired a 7.4 percent stake in Sunshine Oilsands from Canada, which it still holds today. The CIC lent almost $2 billion to Bumi Resources, the world’s third-largest coal exporter. Investments in such energy projects were considered “lower-risk investments” because they yielded “steady returns.” At the time, the Chinese government focused on energy security in investments to meet the country’s development needs.
Javier Capapé Aguilar, an expert on sovereign wealth funds and former advisor to the United Nations, suspects that China’s largest sovereign wealth fund will align its investments more closely with Beijing’s current industrial policy in the future. Specifically, this means bringing more foreign technologies to China. Since green technologies play a significant role in Beijing’s industrial policy, the CIC could invest more funds in this area in the future.
China’s sovereign wealth funds are no exception regarding the lack of green investments in international comparison. “On average less than 1 percent of sovereign funds’ investments go to low-carbon solutions,” an OECD study shows. Few funds publish information on their climate strategies. And they rarely push companies in which they hold stakes to make climate-friendly management decisions at annual general meetings. SWFs generally rarely influence the business of their respective companies, the OECD says.
According to Javier Capapé Aguilar, there are several reasons why sovereign wealth funds are not yet diverting more money into green investments. Firstly, the funds are unsure whether green investments yield sufficiently high returns, Aguilar says. The goal of the funds is to invest the foreign exchange reserves of the country in question in a way that preserves them for future generations. Because of this safe investments were often preferred in the past. In the near future, however, there could be a change in thinking. Investments in fossil energies and industries could soon turn out to be stranded assets and lose value. To meet climate targets, for example, much of the oil will have to remain in the ground. Investments in companies in this sector could lose massive value in the future.
Green investments come at a cost to SWFs, according to Aguilar. He says it is considered too costly to check whether certain companies and infrastructure investments are really green. Disclosure requirements, such as those adopted by the EU, could provide more transparency and lower costs.
Governments are also rarely encouraging their SWFs to invest more in green assets, Aguilar said. The OECD considers it “unlikely that SWFs will take climate-related measures on their own initiative.” It remains to be seen whether China’s central bank will back up its words with action. Mathias Lund Larsen of the International Institute of Green Finance says, “As is so often the case in Chinese politics, there is no transparency on how the allocation of foreign exchange reserves to green assets will be increased.” He doesn’t expect details for a few months.
The sovereign wealth funds of Norway and New Zealand show that there is another way. The two funds have integrated climate risks into their investment processes. Norway, for example, has withdrawn investments from over 150 oil, gas and coal companies and instead invested in companies from the renewable energy sector.
The interest in the origins of the Covid pandemic is understandable. An event that has so far claimed the lives of 3.5 million people has left many patients with physical and psychological sequelae, demands billions of euros and enormous efforts from states and companies on a daily basis – something like this demands clarification. The need for an understandable cause that goes beyond the random occurrence of a natural phenomenon is correspondingly great. But what are we to make of headlines such as: “New evidence for the hypothesis that Sars-CoV-2 originated in the laboratory“? Focus Online originally even texted of the “virus originated in the lab,” but changed the headline on Tuesday to: “Where did Covid come from? Sudden illness of laboratory employees raises new questions.”
The Berliner Tagesspiegel, well-informed on Covid issues, also currently fed the assumption that the virus came from the laboratory. The paper contrasts a statement by the World Health Organization (WHO) with a US intelligence report: the virus has jumped from a bat to humans, says the WHO – it escaped from the laboratory, say the Americans.
Underlying all of this, however, is primarily some confusion about the meaning of the word “origin.” There is virtually no dispute among serious scientists: Respiratory Covid viruses jump back and forth between mammalian species. Sars-CoV-2 has also almost certainly passed from animals to humans. It then began its spread around the globe from patient 0.
However, it is completely unclear who patient 0 was and when and where they became infected. We will probably never know because something like this can only be reconstructed in retrospect with a great deal of luck. Therefore, the thesis that the initial infection occurred in a laboratory is not completely outlandish. After all, the Wuhan Institute of Virology (WIV) has systematically studied bat viruses. Careless handling of a sample may well have led to the infection of an employee. So far, however, any real evidence to support the theory is lacking. The fact that several researchers contracted a severe respiratory infection in November in smog-polluted Wuhan is, at best, an indication but no proof.
When the WHO talks about the “origin” of the pathogen in a laboratory being almost impossible, it means: The virus was not artificially created molecule by molecule, for example, to develop a new bio-weapon. Rather, it evolved in the bat, like so many other viruses. The finding leaves the question of how it got from the bat to man unanswered. Was a farmer patient 0? Did the virus get to humans via intermediate hosts in a wildlife market? (This assumption has now been largely disproved.) Did the event occur when mink were being bred? Or just without intermediate hosts at all in the lab? There are myriad possibilities.
So both theses can be true. The origin of the pathogen was in the wild, but the beginning of the chain of infection was a laboratory accident. However, China could just as well admit this since there is nothing wrong with the task of the WIV: It is supposed to research dangerous viruses and warn about them in time (China.Table reported). On the other hand, it fits the behavioral patterns of the communist state to deal with failures even less transparently than open societies.
A US intelligence investigation pushed by Donald Trump, of all people, is not necessarily the most reputable source here. Meanwhile, scientists are also puzzled by some characteristics of Sars-CoV-2 that point to laboratory experiments as intermediate steps between origin and transition to humans. Although the virus originated in bats, it was better adapted to humans than to bats from the beginning. It also possessed a genetic trait that distinguished it from its wild relatives and made it highly contagious, especially to humans.
However, virologist Christian Drosten of Berlin’s Charité hospital, a global authority on Covid viruses long before the pandemic, considers such rumors to be of little importance. The situation is “under-sampled”, says Drosten. What he means is that we simply lack a virus sample from the missing links between bats and humans.
Drosten’s comparison: “We want to know whether the dolphin is related to the cow. But we’ve never studied a cow, only horses and camels and sometimes a mouse.” While this gives rise to all sorts of speculation, it only allows the relationship between the two species to be inferred indirectly at best – and it doesn’t produce a robust statement about the cow-dolphin connection. “We’re fishing pretty hard in an under-sampled situation,” Drosten says.
So, for the time being, the findings of the present WHO report remain. The virus probably comes from a bat via an unknown intermediate host and has spread undetected among humans for a while (China.Table reported). During this time, it may have adapted to humans, explaining the differences with bat viruses. In any case, Christian Drosten relegates the horror lab stories to the realm of conspiracy theories for now. He warns, “In evolutionary biology, you can rarely prove anything.” And even the current US President Joe Biden wants to wait for a more objective investigation before he commits himself.
The Chinese telecommunications giant Huawei has been the subject of criticism for several years. Expert politicians have considerable security concerns about involving Huawei in the construction of the 5G networks in Germany and Europe. According to experts as well as representatives of Telekom and Vodafone, this development would be almost impossible without Huawei if the Europeans do not want to lose time unnecessarily.
In Germany, one man thus quickly found himself in the political crossfire: David Wang Chengdong. He is Huawei’s Chief Representative in Germany and, as such, represents Huawei in its external relations with politics, the media, academia, and associations. Just like many of his colleagues, as a Chinese expat he is a wanderer between two worlds. On the one hand, he has to report regularly to the company’s top management in Shenzhen, and on the other hand, he has to seek close contact with political and economic representatives in Germany. His rhetoric in Berlin circles is usually characterized by diplomacy.
But given the constant accusations and insinuations against Huawei, which according to critics in the deployment of 5G networks, could possibly tap critical data and transmit it to China or even install a kind of “kill switch” for the network, David Wang also became visibly more belligerent last year. “We’ve been active in Germany for 15 years now and none of our long-standing customers have found any evidence of misuse of our technologies. Even the US has no evidence of that, zero,” Wang told Der Spiegel.
After graduating from Northern Jiaotong University in Beijing, he began his career at Huawei in 1998. Since then, he has worked in Singapore, the Philippines, Malaysia, and Australia, among other places. From 2015 to 2018, David Wang was the Head of Huawei’s branch office in the United Arab Emirates. Subsequently, he took over the post of Chief Representative in Germany. He speaks of a “drama” that is unfolding in light of the heavy politicization around 5G deployment and expansion. In public, Wang usually plays the cool and rational market economist, whose credo is that only competition among providers can ensure the best security. In background interviews, he also emphasizes that it would be fatal for Huawei if the company were to steal data or otherwise abuse the trust of customers and governments.
Despite David Wang’s communicative efforts, the shadow of the company’s headquarters in Shenzhen is long. Huawei is partly run by ex-military men – including founder Ren Zhengfei – who use language that is too military for Europeans. Wang always tries to counter accusations of closeness to the state with Huawei’s origins and current corporate structure. “Huawei is still fully privately owned and virtually owned by its employees. In total, Huawei employs nearly 200,000 people, about half of whom hold shares in the company,” Wang argues. “There is no one else holding shares in Huawei, including the state.”
Despite these words, David Wang knows that Germans and Europeans will continue to view the company with skepticism when it comes to IT security. The fear of Beijing’s influence is too great. And so, the telecommunications expert will have to continue to act as a diplomat in Berlin. Constantin Eckner
They’d better not be scared of heights! Technicians check high-voltage power lines in Zhoushan, East China’s Zhejiang province.
