SK, UAE Sovereign Wealth Fund Collaborate on Climate Change Crisis

Chairman Chey Tae-won of SK Group [Photo by Yonhap News]

[Asia Economy Reporter Donghoon Jeong] SK Group announced on the 16th that it has decided to collaborate with Mubadala, the sovereign wealth fund of the United Arab Emirates (UAE), to overcome the climate change crisis.

On the 15th (local time), SK signed a memorandum of understanding (MOU) with Mubadala at the Presidential Palace in Abu Dhabi, UAE, to establish the "Voluntary Carbon Market (VCM) Asia Partnership." SK Chairman Chey Tae-won, who also serves as the chairman of the Korea Chamber of Commerce and Industry, and Mubadala CEO Khaldoon Al Mubarak signed the MOU on behalf of both parties.

This MOU was made possible reflecting the Korean government's intention that various measures should be prepared not only by the government but also at the private sector level to achieve carbon neutrality.

The Voluntary Carbon Market (VCM) is a private sector-led carbon market where carbon credits certified by private institutions are traded. If this market is activated, it is expected that not only companies with mandatory carbon reduction obligations but also companies or institutions without such obligations will voluntarily participate for social responsibility and environmental protection.

Going forward, the two parties agreed to form consultative bodies such as an operating committee and working groups to concretize the partnership and detailed cooperation plans. They agreed that for the voluntary carbon market to be activated, measures to enhance the reliability and transparency of carbon reduction certification methodologies must precede, and they will focus discussions on this aspect.

In particular, both parties share the view that a carbon market tailored to the characteristics of Asian regional companies is necessary to encourage active participation of Asian companies. Accordingly, they explained that the future direction of cooperation lies in creating common interests so that more countries and private companies within the Asian region can participate beyond the cooperation level between SK and Mubadala.

So far, SK and Mubadala have accumulated experience and know-how in the field of carbon reduction certification and trading. In June 2021, SK established the Carbon Reduction Certification Center, the first among Asian private companies, to certify carbon reduction methodologies and amounts. By October last year, SK had certified 16 methodologies and 740,000 tons of reductions related to SK affiliates’ low-power semiconductors, fuel-efficient lubricants, and others.

Mubadala is a sovereign wealth fund of the UAE, the host country of the United Nations Climate Change Conference of the Parties (COP28), with assets worth $284 billion (approximately 352.728 trillion KRW). It has invested in global eco-friendly sectors and holds shares in AirCarbon Exchange (ACX), a carbon credit trading service company established in 2019.