Saudi sovereign wealth fund scopes banks for ESG framework - sources | Reuters

Saudi Crown Prince Mohammed bin Salman attends a session of the Shura Council in Riyadh, Saudi Arabia, November 20, 2019. Bandar Algaloud/Courtesy of Saudi Royal Court/Handout via REUTERS

DUBAI, July 12 (Reuters) - Saudi Arabia's sovereign wealth fund has asked banks to help it develop an environmental, social and governance (ESG) framework, four sources said, a move that could allow it to expand its funding base to attract ESG-focussed investors.

The Public Investment Fund (PIF) sent a request for proposals to banks last month, said the four sources with direct knowledge of the matter, speaking anonymously because the matter is private.

PIF - at the centre of Saudi de facto ruler and Crown Prince Mohammed bin Salman's Vision 2030 that aims to wean the economy off oil - has been funding itself in recent years with tens of billions of dollars in loans.

One of the sources said developing an ESG framework was likely a precursor for a multibillion dollar bond sale, which would be the Saudi wealth fund's first.

Once an ESG framework is developed, PIF may need credit ratings and an audit of its finances before it can issue bonds, the source said, adding the fund could sell bonds in the fourth quarter if "all goes smoothly."

PIF did not respond to an emailed request for comment.

PIF signed a $15 billion loan with a large group of banks in March, which followed a $10 billion loan it took in 2019 that was repaid last year and an $11 billion facility in 2018.

The development of a framework to assess the impact of its sustainability practices comes amid growing awareness among international investors about ESG risks.

The Red Sea Development Company, owned by PIF, secured earlier this year a $3.8 billion "green" loan for new hotels powered by renewable energy.

PIF is also the cornerstone investor in NEOM, a futuristic development in Saudi Arabia whose flagship project is a zero-carbon city.

Reporting by Yousef Saba and Davide Barbuscia Additional reporting by Hadeel Al Sayegh and Saeed Azhar Editing by Mark Potter

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https://www.reuters.com/business/sustainable-business/saudi-sovereign-wealth-fund-scopes-banks-esg-framework-sources-2021-07-12/?taid=60ec4059fdc7d300011ff621