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Saudi FII Draws Global Roadmap for Sustainability

Richard Attias, CEO of the FII Institute, speaks at the event. (SPA)
Richard Attias, CEO of the FII Institute, speaks at the event. (SPA)
    Cairo, London – Lamia Nabil and Asharq Al-Awsat
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Saudi FII Draws Global Roadmap for Sustainability

Richard Attias, CEO of the FII Institute, speaks at the event. (SPA)
Richard Attias, CEO of the FII Institute, speaks at the event. (SPA)

Saudi Arabia’s Future Investment Initiative (FII) hosted on Friday a global summit in London about Environmental, Social and Governance in emerging markets, involving over 40 world leaders, global CEOs, international investors, thought leaders and heads of sustainability.

In his opening speech, Richard Attias, CEO of the FII Institute, reminded the audience that the planet is suffering from major climate problems due to the destruction of nature, peace and security, stressing that environmental, social and corporate governance are important tools to guide capital to meet various problems and challenges.

Attias added that it is estimated that efforts to address climate change and achieve the United Nations Sustainable Development Goals by 2030 are underfunded with a value of 5 to 7 trillion dollars annually.

Given this funding gap, it is unlikely that governments alone will address the urgent priorities of the planet.

According to Attias, it is also estimated that investor demand in environmental, social, and institutional sustainability criteria will continue to grow rapidly from total assets of $41 trillion to $53 trillion by 2025.

“Central to our work at FII Institute is to increase awareness about the weaknesses in current ESG standards and their impact on global sustainability prospects, and to advocate for an inclusive and equitable application of ESG through driving real action by key players globally,” said Attias.

“ESG has been one of the fastest-growing investment strategies over the past few years, accounting for one-third of all assets under management. But this growth is not even. Working with our partners at EY, we identified and removed the barriers to ESG investment in emerging markets, which are often overlooked,” he added.

“By launching the Inclusive ESG Framework and Scoring Methodology, investing in a global sustainable solutions company, and publishing our recent ESG white paper — we are making tangible actions to create a better future for humanity. And we are confident that our partners around the world will help us drive those actions further.”

The FII event in London also unveiled a new inclusive ESG framework and scoring methodology to inform and accelerate investments in emerging economies.

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Venezuela Depreciation Risks Reversing Years of Inflation Gains

People walk through a market in the low-income Petare neighborhood, in Caracas, Venezuela November 16, 2024. (Reuters)
People walk through a market in the low-income Petare neighborhood, in Caracas, Venezuela November 16, 2024. (Reuters)
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Venezuela Depreciation Risks Reversing Years of Inflation Gains

People walk through a market in the low-income Petare neighborhood, in Caracas, Venezuela November 16, 2024. (Reuters)
People walk through a market in the low-income Petare neighborhood, in Caracas, Venezuela November 16, 2024. (Reuters)

Currency depreciation is set to reverse years of declining inflation in economically beleaguered Venezuela, public and private sector sources say, as foreign currency sales fall short of demand and the socialist government keeps tight-lipped about its strategy.

After years of hyperinflation and amid broad US sanctions, in 2022 the administration of President Nicolas Maduro began using orthodox policies including credit restrictions, lower public spending, a fixed dollar-bolivar rate and central bank sales of billions of dollars in foreign currency to tamp down consumer prices.

Maduro, who will begin his third term in January after a disputed election that the opposition and international observers say he lost, has said his government defeated inflation of more than 100,000% and prices in 2024 are similar to those in 2014.

But the administration's policy has now changed.

After more than nine months of the exchange rate being held at 36.5 bolivars to the dollar, the government in mid-October allowed the currency to float, beginning a depreciation that has seen the bolivar slide to about 45 versus the dollar, according to central bank figures.

Analysts say the over-valued currency made imports cheaper than locally-produced goods, impacting Venezuela's private sector and helping push prices up by 12% in nine months.

The untethering of the exchange rate will also put upward pressure on prices in the final quarter of 2024, financial and business sources said, with analysts predicting in a LatinFocus survey the rate will end the year at 50 bolivars to the dollar.

Year-on-year inflation was 25% through September. Official figures for October have not yet been released.

"For nine months the depreciation of the currency was zero while inflation was rising, which exposed problems in the exchange scheme," said economics professor and consultant Daniel Cadenas, who added the market depends on oil income. "For the system to function, there needs to be a growing source of exchange and that's not possible."

The government had predicted internally that inflation would close the year at 30%, two sources with knowledge of the projection said, but depreciation could increase the figure and local analysts have estimated inflation between 35% and 40%.

"There has been a necessary adjustment in the exchange rate that will have an impact on inflation," said Asdrubal Oliveros, head of local think tank Ecoanalitica. "The government has understood it needs to devaluate."

REDUCED CENTRAL BANK SALES

Vice President Delcy Rodriguez, who until recently also served as finance minister, told an event with business people last month that there must be "reflection" about the use of foreign exchange.

"We should all be concerned with how foreign exchange is used in imports. It is a subject the Finance Ministry is reviewing," she said. "We need to take care of foreign exchange because this is a blockaded country and there cannot be cheap exchange for hair dye."

Rodriguez's comments are the only ones made on the subject by the government since devaluation began. Neither the central bank nor the communications or finance ministries responded to requests for comment.

Private sector demand for cheap foreign exchange increased during the nine months the rate was held, even as the quantity of dollars being injected into the market by the central bank was reduced, sources said.

In July the bank was offering some $800 million, but by October that figure had fallen to $400 million, according to calculations by local consultancy Sintesis Financiera.

The central bank did not respond to a question about the reduction.

"The strategy in exchange policy is not going ahead," a government source said, without giving further details.

Food and medicine companies in Venezuela are allowed to pay for some of their goods with foreign currency, while other companies are given central bank promissory notes indexed to a specific exchange rate.

Two private sector sources said many businesses are eating through their inventories in the face of import difficulties.