Kosovo Launches Sovereign Wealth Fund | Chief Investment Officer

The Republic of Kosovo officially launched a sovereign wealth fund on May 7.

According to financial boutique and pension fund tracker Global SWF, which was invited to the launch and presented a market update to the prime minister of Kosovo, the fund will take the form of a strategic/development fund. It is expected to initially be seeded with stakes of less than 51% in six government-owned companies: Trepča Mines, Kosovo Energy Corp., postal services provider Post of Kosovo, Telecom of Kosovo, infrastructure company KESCO and Kosovo Railways.

In addition to managing the companies, the fund also aims to facilitate foreign direct investment from other sovereign wealth funds. The fund will also likely be governed by a non-executive board set up by Kosovo’s government, comprised of four to six independent members, which could include international advisers.

“The government stands strongly behind this vision of the sovereign fund, believing that such an initiative will result in stabilization of the economy through diversity, creation of profit for the state through wise investments, generating wealth for generations to come,” Kosovo Prime Minister Albin Kurti said in a statement.

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According to a spokesperson for Global SWF, the management team and portfolio of the sovereign wealth fund have not yet been defined. While some assets have been identified to be transferred, they have not yet been valued.

The fund is expected to comprise a relatively small team, according to Emanuel Bajra, a member of the working group set up by the Kosovan government to establish the fund. He told Global SWF that the CEO could be recruited externally to “bring best practices from global capital markets and sovereign wealth funds.” He added that the design of the fund’s governance and accountability is still evolving, “but we are confident it will have no political influence.”

Bajra also said the fund’s intent is to “intensify and solidify” the financial services and mineral sector, which include lithium, gold, chrome and lignite mining.

“Once the fund is established, we can pursue two different routes: either target-specific SWFs to discuss partnerships or go on road shows,” he said. “But this will in any case come after we have absorbed the six major assets and ensure the profitability and financial sustainability of our portfolio.”

Kosovo, a province of the former Yugoslavia, declared its independence from Serbia in 2008. It is recognized by more than half of United Nations member states but cannot join the U.N. due to objections by two permanent members of the Security Council, Russia and China. Kosovo applied for European Union membership in December 2022.

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Tags: Emanuel Bajra, Global SWF, KESCO, Kosovo, Kosovo Energy Corporation, Kosovo Railways, Post of Kosovo, Sovereign Wealth Fund, Telecom of Kosovo, Trepča Mines

Three New York City pension funds face a lawsuit accusing them of breaching their fiduciary duties by divesting approximately $4 billion worth of assets from companies involved in fossil-fuel extraction.

The complaint alleges that the pension funds—the New York City Employees’ Retirement System, the Teachers’ Retirement System of the City of New York and the New York City Board of Education Retirement System—“breached their fiduciary duties and abused their control,” calling their fossil-fuel divestment policy a “misguided and ineffectual gesture to address climate change.”

The plaintiffs include conservative nonprofit Americans for Fair Treatment, as well as a subway train operator, a public school teacher, a school secretary and an occupational therapist in an elementary school.

The lawsuit centers on a decision by the pension funds’ boards of trustees in 2021 to divest an estimated $4 billion from securities related to fossil-fuel companies. At the time, the trustees and then-New York City Comptroller Scott Stringer said the decision followed “an extensive and thorough fiduciary process.” However, the complaint alleges the divestment was voted through “to advance environmental goals unrelated to the financial health of the plans.”

The complaint calls the divestment an “unlawful decision to elevate unrelated policy goals over the financial health of the plans” and claims it is inconsistent with the trustees’ fiduciary responsibilities.

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The complaint alleges the trustee votes took place “in closed-door sessions and the vote tallies and the investment analyses, if any, on which the trustees relied were never made public.” It also accuses current NYC Comptroller Brad Lander of using his office “to advance an environmental agenda at the expense of retirement security.”

“While we don’t comment on pending litigation, we take our fiduciary duty very seriously,” a spokesperson for the NYC Comptroller’s Office said in an emailed statement. “The trustees of all three funds voted in 2021 to exclude fossil fuel reserve owners from their portfolios, in accordance with their fiduciary duty following a deliberative process that began in 2018, with the goal of protecting beneficiaries from the financial risks of investing in fossil fuel reserves.”

When the divestment was announced in 2021, the NYC Comptroller’s office said it expected the divestment to be completed within five years.

“We take this issue very seriously; pensions are a promise, and governments owe it to their employees to keep their commitment,” Elisabeth Messenger, CEO of Americans for Fair Treatment, said in a statement. “The teachers, maintenance workers, municipal employees, and more who keep our government running effectively deserve properly managed retirement systems, free from politically motivated intervention.”