A trust fund set up to support Tuvalu’s economic development has ended up in fossil fuel investments despite the island nation’s vocal advocacy for urgent climate action, an Agence France-Presse investigation reveals.

“It’s not a good look on Tuvalu, given the very strong advocacy work that we do in terms of combating climate change,” Tuvalu Prime Minister Feleti Teo told AFP at the Island State Oceans Summit in Tokyo.

The Tuvalu Trust Fund (TTF) was set up in 1987 by the governments of Tuvalu, New Zealand, Australia, and the United Kingdom, though the British government withdrew in 2004. It was designed to provide [pdf] the Tuvalu government with a reliable source of revenue. Management of TTF was entrusted to Mercer, an investment consulting firm, in 2022.

The small island nation state is at heightened risk from climate change. Its land area could be almost entirely submerged by rising sea levels, and in recent years Tuvalu has been a vocal critic of major emitting countries and a proponent of loss and damage payments to small, climate-vulnerable countries. Tuvalu was among six countries calling for a fossil fuel-free Pacific, backs the signing of a global fossil fuel non-proliferation treaty by all countries, and will be the next country to host the Conference on Transitioning Away from Fossil Fuels.

The country made headlines in late May when an investigation by AFP found that the TTF has investments in companies linked to fossil fuels.

AFP analysed data for 14 Mercer funds held by Tuvalu to find that its fund held stakes in companies including the Indian multinational Reliance Industries, which owns the Jamnagar petrochemical complex in western India, American utilities that were listed as the second- and third-largest greenhouse gas emitters in the United States, and mining behemoth Rio Tinto.

The investigation also found investments in Australian fossil fuel company Woodside Energy. In 2025, Tuvalu’s climate minister had issued a statement deploring the Australian government’s extension of a Woodside Energy gas project, saying it would “lock in emissions until 2070” and threaten the island’s survival, ABC News reported at the time.

AFP’s reporting of TTF’s links to oil and gas companies drew criticism from the climate community. Tuvalu climate activist Richard Gokrun, told AFP: “We stand strong for the phaseout of fossil fuels, because we see the impacts to our country.”

TTF is reviewing its exposure to fossil fuels after the investigation, a spokesperson said. “Since Tuvalu is particularly susceptible to the adverse impacts of climate change, the TTF continues to seek to minimize the fund’s exposure to fossil fuel reserves and carbon emissions.”

Mercer declined to comment on client portfolios.

In its Statement of Investment Objectives and Policy, adopted in May 2025, TTF’s Board outlines that its fiduciary duty extends beyond financial interests to also include “a responsibility to ensure that the activities of the companies that the Fund invests in do not negatively impact beneficiaries,” including future generations of Tuvaluans. Because of the country’s vulnerability to climate change, the Board commits to minimizing the Fund’s exposure to fossil fuel reserves “to the extent that it is possible to do so.”