LONDON: London can offer Gulf states the expertise they are looking for as they seek to diversify their economies and showcase their commitment to net zero in the build-up to COP28 in the UAE, the Lord Mayor of the City of London told Arab News prior to his visit to the region.
Nicholas Lyons kicks off his tour of the Gulf on Sunday, looking to expand not only investment into the UK but also assessing ways in which the City of London can put the country’s vast pension pot to work in countries such as Saudi Arabia and the UAE.
“There’s an ongoing, vibrant relationship between the UK and the Gulf. We’ve seen successive lord mayors make trips there, so the relationships that are there are very strong and are held at very senior positions,” he said.
“I expect my trip will relate to fintech, green and sustainable finance, but also a conversation about pension systems because there are a lot of countries that are beginning to look at their pension systems and ask whether or not they’re fit for purpose.”
Britain's Prime Minister Rishi Sunak (C) poses for a picture with City of London Mayor Nicholas Lyons during a banquet in honor of the outgoing mayor on November 28, 2022. (AFP)
Noting that the UK has some £4 trillion ($4.8 trillion) worth of pension assets, Lyons said the Gulf offers opportunities for this money to be deployed more actively, meaning the investment opportunities are not all one way.
He was critical of the way the UK administers its pensions savings, describing the country as “very much underinvested,” with only 7 percent of the pot in productive assets compared to an average of 19 percent for the next seven largest pension pots in the world.
“This money needs to be deployed more actively in productive assets (because) we have the second-largest pension pot in the world, and when you look at places likes Australia and Canada, they’re putting 25-30 percent to work,” he said.
Lord Mayor Nicholas Lyons in New York City. (Supplied)
“We’re very much underinvested in this area. I’d say we’re significantly underinvested and missing a chance, and the fact that Saudi Arabia and the UAE are here (already investing in the UK) is strong corroboration of the opportunities that are there for us.”
Saudi Arabia and the other Gulf states have been pushing heavily to diversify their economies away from hydrocarbons.
Lyons, whose one-year tenure as the 694th Lord Mayor of the City of London began at the end of 2022 — replacing Vincent Keaveny — said he is “very conscious” of London’s reputation as a leading location for asset management and financial services.
The City of London financial district, including the Gherkin (C) and the 'Walkie Talkie' (L) is seen from City Hall under a cloudy sky in London. (AFP file)
“The Gulf states are looking at financial services as offering one potential avenue for growth, and there’s real expertise in London on this front that they’re looking to access and discuss — our close relations mean there’s a level of trust to have open discussions,” he said.
“I think as Saudi Arabia looks to develop its financial services, there’s expertise that we can bring to the insurance and pensions industries in Saudi Arabia, with there being other underdeveloped industries that could also benefit from the help of UK companies.”
Financial services are not the only areas of expertise that Lyons will be seeking to talk up. Noting that the UK boasts four of the top 10 and seven of the top 20 universities in the world, he said there will be an emphasis on the innovation taking place in the country.
“With that university quality we’ve built up a very strong entrepreneurial culture, and this is seen in the great early-stage businesses in tech, fintech, life sciences and biotech, with (the UK government’s chief scientific adviser) Sir Patrick Vallance doing great work promoting the country as a science superpower,” Lyons said.
Skyscraper office blocks, including Tower 42 (L), the Leadenhall Building, commonly called the "Cheesegrater" (C), 30 St Mary Axe commonly called the "Gherkin" (centre R), and 52–54 Lime Street, commonly called the "Scalpel" (R) are pictured from inside the Sky Garden in London. (AFP)
“Countries like Saudi Arabia have recognized the significant investment opportunities here, and have made investments in things like synthetic aviation fuel. And there’s the great work also being done in renewable technologies.”
Talk on technology to address climate change follows the world’s largest economy, the US, having just passed its Inflation Reduction Act, which will pump some $360 billion in subsidies into domestic companies to stimulate growth in renewable technology.
FASTFACT
Nicholas Lyons is the 694th Lord Mayor of the City of London and ambassador for the City and UK's financial and professional services sector.
But Lyons said renewables have become incredibly pressing for Gulf states’ efforts to diversify their economies and play their part in getting to net zero, with Dubai serving as this year’s host of the 28th UN Climate Change Conference.
“It’s really, really important that COP28 is being held in a hydrocarbon economy such as the UAE because it basically confirms that there’s engagement from these countries, that they want to make the transition and want to be part of the global solution,” he said.
“They also bring the particular advantage of having accumulated substantial amounts of money through the sale of these hydrocarbons, and have shown that they’re now keen to redeploy those profits into renewable technologies.
A picture shows Waterloo Bridge over the River Thames in London on October 25, 2020 with the City of London financial district in the background. (AFP)
“I think COP28 will prove to be a very important COP, and I think it will be a very practical one that will look very carefully at both what’s already going on but also at the potential solutions.”
In anticipation of the conference, the City of London — together with the COP Egyptian presidency of 2022 — is hosting its own Net-Zero Delivery Summit, with an eye to holding financial services companies to targets and showcasing the expertise that it can bring to the debate.
That debate, Lyons said, must emphasize a “just” transition that considers that while this is a global problem, it will be necessary to look at it on a “country-by-country” basis, and the path to net zero “won’t be linear.”
He added that during his regional tour, “we’ll be looking very carefully at how the Gulf plans its transition to net zero between now and its target of 2060, but with milestones along the way, including 2030.”
