They are the opposite of day-traders. They hold the sovereign wealth of their countries, the life savings of their pensioners. They are entrusted to manage the capital for their stakeholders, for the long-term.
And they are so large, so invested in every industry and every geography, that they have no escape from the escalating dislocations of climate change and income inequality. When you “own the universe,” there are no externalities.
That huge pension and sovereign-wealth funds would lead the capital markets’ rotation toward social and environmental value-creation would have seemed laughable even five years ago. Now, as some of the world’s biggest asset managers change course, it seems almost inevitable.
The think tank New America has published a list of such leaders, 25 SWFs (sovereign wealth funds, quasi-national funds generally endowed with natural resource or other common wealth) and GPFs (government pension funds, though some asset managers are private firms contracted to manage retiree funds). Those leaders represent $4.9 trillion in assets under management.
The thinktank, as part of its its Bretton Woods II initiative, did a deep research dive on 121 funds, representing $15 trillion in assets. (Dalberg, the Global Development Incubator and the Fletcher School at Tufts supported the project.)
The distribution of scores between the leaders and laggards is striking. It appears the 25 leaders are indeed “positive deviants” when it comes to criteria such as intention, implementation and benchmarks and, particularly, commitment to, their “responsible” investment strategies. Leaders also scored higher than the overall average in their attention to frontier (some would call them “growth”) markets and to “sustainability.” But on both counts, strikingly, even the leaders’ scores were below ‘5’ on a scale of 10.