The Tamesis
A trust fund set up to help Tuvalu, a South Pacific nation severely threatened by climate change, has invested in coal mining, gas exploration and the world’s largest crude oil refinery, an AFP investigation has revealed.
Few countries are more vulnerable to the impacts of climate change than Tuvalu, a chain of coral atolls facing ocean acidification, tropical diseases and rising sea levels.
Land is already so scarce throughout the archipelago, located between Australia and Hawaii, that the international airport runway doubles as a makeshift sports ground.
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With a fragile economy and few natural resources, the low-lying Pacific island nation relies on a government trust fund to help cope with the rising costs of the climate crisis.
Tuvalu has entrusted the management of its largest single financial asset to consulting firm Mercer, which invests in funds holding stakes in major fossil fuel companies, according to financial records and government reports reviewed by AFP.
Tuvalu climate activist Richard Gochran said it was “really shocking” to see the country being associated with fossil fuel companies.
“We strongly support the phase-out of fossil fuels because we see the impact this has on our country,” the former weather forecaster told AFP in the capital Funafuti.
“The main change we’re seeing is sea level rise. We’re starting to see new places being flooded.”
The Tuvalu Trust Fund, established in 1987 with help from Australia, New Zealand and the United Kingdom, provides vital income to a country that relies on foreign aid.
Mercer takes over management in 2022. Tuvalu said it was reviewing the $200 million fund’s “fossil fuel exposure” after receiving the AFP findings.
Investment in Reliance India
Tuvalu’s expectations are reflected in the fund’s “investment objectives”.
“Tuvalu is particularly vulnerable to the adverse effects of climate change and it is appropriate to reflect this in investment strategies,” the document states.
The document adds that the fund must minimize risks to “fossil fuel reserves and carbon emissions.”
According to its September 2025 quarterly report, Mercer invested Tuvalu’s funds in funds specializing in “Australian equities”, “International equities” and “Emerging Markets”.
Mercer doesn’t need to list the dozens of companies in these funds, but it does disclose the 10 largest holdings.
AFP analyzed data on 14 Mercer funds held by Tuvalu.
Mercer’s “Emerging Markets” fund invested in Indian multinational Reliance Industries, based on holdings data through December 2025.
Reliance Industries owns the Jamnagar petrochemical complex in western India, a massive industrial complex billed as the world’s largest single-site crude oil refinery.
By 2022, it had emitted nearly 20 million tons of carbon dioxide used to heat the planet, making it the world’s most emitting refinery, according to the nonprofit Climate Tracker.
Some projects ‘threaten Tuvalu’s existence’
Tuvalu has also invested in Mercer funds, which hold U.S. utilities Southern Company and Duke Energy, the second and third largest emitters of greenhouse gases in the United States, according to the Institute of Political Economy.
A 2024 report by the Energy and Policy Institute found that Southern paid $60 million to “groups and companies involved in climate disinformation campaigns between 1993 and 2004.”
Mercer put Tuvaluan money into funds investing in mining giant Rio Tinto and Australian oil and gas giant Woodside Energy, which government data shows are among Australia’s top 10 greenhouse gas emitters.
The Woodside investment is particularly embarrassing for Tuvalu, which came under heavy criticism when Australia approved a 40-year extension to the Woodside North West Shelf gas project in 2025.
Climate Minister Maina Talia warned at the time that emissions from the project threatened Tuvalu’s “existence” and urged Australia to reject the extension.
About 12%, or $25 million, of the Tuvalu Trust is invested in Mercer’s Australian Equity Fund, which holds the largest stake in mining and metals company BHP, one of Australia’s most valuable companies and the world’s largest mining company.
BHP has dived significantly from thermal coal in recent years but still holds stakes in Australian mines that mine the fossil fuel for steelmaking.
‘No formal consideration of climate change’
Tuvalu will receive a rare moment of international attention later this year when the country’s leaders host a special summit ahead of the United Nations COP31 climate conference, said to be an opportunity to showcase how climate change is affecting the region.
According to a government report in September, the country aims to find “new donors” for its trust fund through the COP process.
Its Prime Minister Feleti Teo has made it clear that he believes “opening up, subsidizing and exporting fossil fuels is unethical and unacceptable”.
“Plainly speaking, if major powers continue to open new fossil fuel projects, it is a death sentence for us,” he said in 2024.
But Sebastian Glick, a climate finance expert at the University of Otago, said Mercer’s investment appeared to “do not actually formally consider climate change”.
The Tuvalu Trust Fund (TTF) is reviewing its fossil fuel exposure in light of an AFP investigation, a spokesman said.
“As Tuvalu is particularly vulnerable to the adverse effects of climate change, the TTF continues to seek to minimize the fund’s exposure to fossil fuel reserves and carbon emissions,” she added.
“We do not provide commentary or analysis of our clients or their investment portfolios,” Mercer said.
- Vishakha Saxena Additional Editor AFP
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