Tuvalu's fossil fuel divestment power limited: NZ papers

Tuvalu has "limited ability" to halt its government investments in fossil fuel companies, according to internal New Zealand government documents released under freedom of information laws.

New Zealand sits on the board of the $200 million Tuvalu Trust Fund, which supports the Pacific nation's government budget. In a briefing, New Zealand officials wrote that because the fund was small by global standards, Tuvalu had limited ability to tailor specific investment preferences.

The documents said Tuvalu's money was invested in funds offering broad exposure to many companies, including some with "significant greenhouse gases emitters."

Tuvalu is a low-lying atoll nation of about 10,000 people and has been one of the most vocal countries calling for stronger climate action. It has condemned new coal and gas projects as a threat to its people while also relying on profits from the trust fund.

The fund's investment objectives say it must minimise exposure to fossil fuel reserves and carbon emissions where possible. Climate finance expert Sebastian Gehricke of New Zealand's Otago University said there was little evidence this had been done and said Tuvalu's money had not been invested in any sustainable funds.

Tuvalu Prime Minister Feleti Teo told AFP in June that fossil fuel investments were "not a good look" given the country's climate advocacy.

The Tuvalu Trust Fund said it had made substantial progress in reducing portfolio carbon emissions, with the carbon footprint of its investments down 42 percent between 2020 and 2025. The supplied material says it was not clear whether that fall resulted from the fund's own decisions or from a wider trend of companies reducing emissions.

New Zealand's foreign affairs department said it would work with Tuvalu to ensure investment priorities were aligned with long-term resilience. Australia said it was supporting Tuvalu's approach to environmental and social governance issues.