Apr 25, 2019

Leading global investors top for responsible investing practices

By Andrew Holt

Responsible Asset Allocator Initiative reveals leader list in ESG investing

Leading global investors CalPERS, Japan’s Government Pension Investment Fund and the UK’s Strathclyde Pension Fund are among some of the most responsible asset allocators in the world, according to a new ESG ranking and report.

The Responsible Asset Allocator Initiative (RAAI) at New America – an organization dedicated to tackling the challenges caused by rapid social and technological change – has released its latest ranking of sovereign wealth funds (SWFs) and government pension funds based on socially aware and environmentally focused investing practices. This is the second publication of the ranking, which was first released in 2017 and was developed with the Fletcher School at Massachusetts-based Tufts University.

The group evaluated 471 allocators, analyzing 197 funds comprising $21 tn in assets, up from 121 ratings in 2017. A resulting list of the top 25 – which are listed alphabetically below – includes Canada’s Caisse de dépôt et placement du Québec, the Canada Pension Plan Investment Board, CalSTRS, the second-largest Dutch pension fund PGGM and the Ontario Teachers’ Pension Plan. Canada has the greatest number of funds on the list with five, followed by France and the US with three each.

‘The responsible investing practices of these funds provide a benchmark of excellence for peers, potentially unleashing hundreds of billions of dollars to finance renewable energy, sustainable infrastructure, clean water, healthcare and education,’ says Scott Kalb, founder and director of RAAI.

The ranking was based on 10 core criteria, including disclosure, intention, clarity, integration, implementation and commitment.

Kalb adds: ‘Increasingly, the asset allocator community is recognizing that investing responsibly and sustainably is a better way to optimize returns, reduce risks and identify opportunities for future growth, all while aligning portfolios with the broader social and environmental concerns of stakeholders.’

The report itself also recommends that institutions, when tackling ESG issues, start with the basics. ‘When it comes to implementation, begin with the tasks that are easiest for your organization,’ it suggests.

And while the report highlights ways in which allocators could make changes, it notes that investors should stay focused on the purpose of the specific SWF or government pension fund, rather than being too focused on grand plans to save the planet. ‘Your work should always be aligned with the financial objectives and goals of the fund,’ it warns.

The total assets of funds in the Leaders List are larger than the combined GDP of 145 countries and 44 times larger than the total loans and disbursements made by the World Bank Group in 2018.

The Leaders List (in alphabetical order)