The world’s most responsible asset allocators strive to address behaviors that could destroy value over the long term, such as environmental pollution, labor exploitation or unethical operations.
“Responsible investing is part of their DNA and embedded in their culture,” Scott Kalb, a fellow and senior advisor at the New America Foundation, said upon the think tank’s release of a new ranking of the world’s 25 most responsible sovereign wealth and government pension funds.
The list is part of the Responsible Asset Allocators Initiative at Bretton Woods II, which operates within New America to help large asset allocators reduce risks and optimize returns through strategic investments in responsible investing and sustainable development.
“The Responsible Asset Allocator Initiative is a window into the future of investing,” the Bretton Woods II program’s director, Tomicah Tillemann, said in the statement. “In the past, there was a misperception that asset allocators had to choose between maximizing returns and deploying capital responsibly. Our findings show that that is not the case.”
Tillemann said the leaders list included many of the biggest and most sophisticated funds in the world with an average fund size of nearly $200 billion.
“They are embracing environmental, social and governance stewardship as core components of their investment decision-making process,” he said. “As fiduciaries, many realize that doing so is necessary to maximize risk-adjusted returns.”
The project evaluated some 300 asset allocators, and performed a detailed analysis on 121 funds that met a series of high-level selection criteria. These had combined assets under management of $15.3 trillion.
They were evaluated on 10 principles: disclosure, intention, clarity, integration, implementation, commitment, accountability, partnership, standards and development.
The 25 funds selected for the leaders list had combined assets of $4.9 trillion, larger than the GDP of every country except the U.S. and China, according to the statement.
It said a 1% allocation of total assets to sustainable investments in the developing world would be equal to twice as much as all loans and financial services extended to developing countries by the International Bank for Reconstruction and Development in 2016.
The list includes sovereign wealth and government pension funds from Africa, Australasia, Asia, Europe, Latin America and North America. Canada had the highest number of funds represented on the list with six of the 25.
Following are the Bretton Woods II’s 25 most responsible asset allocators, listed alphabetically:
1. Alberta Investment Management Corp – Canada, $95.7 billion (2017)
2. AP Funds – Sweden, $195 billion (2016)
3. APG Groep – Netherlands, $531.8 billion (2017)
4. ATP Group – Denmark, $118.9 billion (2017)
5. British Columbia Investment Management Corp – Canada, $107.5 billion (2017)
6. Caisse de dépôt et placement du Québec – Canada, $235.1 billion (2017)
7. Caisse des Dépôts et Consignations – France, $231.2 billion (2017)
8. California Public Employees’ Retirement System – U.S., $331.9 billion (2017)
9. Canada Pension Plan Investment Board – Canada, $251.3 billion (2017)
10. Commonwealth Superannuation Corp – Australia, $30.2 billion (2016)
11. ERAFP – France, $26 billion (2017)
12. Government Pension Fund/Global – Norway, $980.8 billion (2017)
13. Ireland Strategic Investment Fund – Ireland, $10 billion (2017)
14. Khazanah Nasional Berhad – Malaysia, $37.7 billion (2016)
15. National Pension Service – Korea, $521.8 billion (2017)
16. New York State Common Retirement Fund – U.S., $192 billion (2017)
17. New Zealand Superannuation Fund – New Zealand, $25.9 billion (2017)
18. Ontario Teachers’ Pension Plan – Canada, $139.3 billion (2016)
19. PGGM – Netherlands, $242 billion (2016)
20. PKA – Denmark, $40.1 billion (2017)
21. PREVI – Brazil, $74 billion (2015)
23. Public Investment Corp – South Africa, $137.9 billion (2017)
24. Public Sector Pension Investment Board – Canada, $135.6 billion (2017)
24. Temasek – Singapore, $202.2 billion (2017)
25. United Nations Joint Staff Pension Fund – Global, $60.3 billion (2017)