TY - JOUR
T1 - The times are they a-changin’? Tracking sovereign wealth funds’ sustainable investing
AU - Bortolotti, Bernardo
AU - Loss, Giacomo
AU - van Zwieten, Robert W.
N1 - Funding Information:
We thank Omrane Guedhami (the editor) and two anonymous referees for their constructive criticism and suggestions. We also thank David Crofts, Veljko Fotak, Peter Lejre, Antonio Ribeiro, Franziska Zimmermann, and the participants in the 2022 AUS Conference The evolving role of sovereign wealth funds: issues and challenges for useful comments. Oliviero Bertoni, Federico Bindi, Thomas Leung, Coralie Vachon-Cnockaert, Yi Da (Edwin) Tsai, and Bruce Wen provided excellent research assistance. The usual disclaimer applies. Financial support from Baffi CAREFIN Center is gratefully acknowledged.
Funding Information:
We thank Omrane Guedhami (the editor) and two anonymous referees for their constructive criticism and suggestions. We also thank David Crofts, Veljko Fotak, Peter Lejre, Antonio Ribeiro, Franziska Zimmermann, and the participants in the 2022 AUS Conference The evolving role of sovereign wealth funds: issues and challenges for useful comments. Oliviero Bertoni, Federico Bindi, Thomas Leung, Coralie Vachon-Cnockaert, Yi Da (Edwin) Tsai, and Bruce Wen provided excellent research assistance. The usual disclaimer applies. Financial support from Baffi CAREFIN Center is gratefully acknowledged.
Publisher Copyright:
© 2023, The Author(s).
PY - 2023/9
Y1 - 2023/9
N2 - This paper analyzes the orientation towards sustainable investment by global sovereign wealth funds (henceforth SWFs) over the last two decades. Our data analysis reveals that over the last 5 years, there has been a noticeable uptick in investing along the Sustainable Development Goals (henceforth SDGs) by SWFs. From 2018 onwards, momentum has been building in climate and energy, especially in deal value. We also see agriculture come to the fore in 2020, and to a lesser degree, investments in education, as SWFs appear to extend their investment remits slowly but surely into other long-term investment themes. The paper also provides preliminary descriptive evidence about the drivers of sovereign sustainable investment, showing that the presence of explicit environmental, social, and governance (henceforth ESG) policies in place favor capital deployment aligned with SDGs. Finally, the paper studies the ESG performance of a sub-sample of listed firms that SWFs have invested in, finding a significant deterioration in the governance pillar. This result is broadly consistent with previous research on the agency costs of sovereign ownership. The paper concludes by making policy recommendations regarding fiduciary duty, investee corporate governance, and climate investments, which would contribute to modernizing the role of SWFs in the global economy.
AB - This paper analyzes the orientation towards sustainable investment by global sovereign wealth funds (henceforth SWFs) over the last two decades. Our data analysis reveals that over the last 5 years, there has been a noticeable uptick in investing along the Sustainable Development Goals (henceforth SDGs) by SWFs. From 2018 onwards, momentum has been building in climate and energy, especially in deal value. We also see agriculture come to the fore in 2020, and to a lesser degree, investments in education, as SWFs appear to extend their investment remits slowly but surely into other long-term investment themes. The paper also provides preliminary descriptive evidence about the drivers of sovereign sustainable investment, showing that the presence of explicit environmental, social, and governance (henceforth ESG) policies in place favor capital deployment aligned with SDGs. Finally, the paper studies the ESG performance of a sub-sample of listed firms that SWFs have invested in, finding a significant deterioration in the governance pillar. This result is broadly consistent with previous research on the agency costs of sovereign ownership. The paper concludes by making policy recommendations regarding fiduciary duty, investee corporate governance, and climate investments, which would contribute to modernizing the role of SWFs in the global economy.
KW - ESG
KW - Sustainable Development Goals
KW - sovereign wealth funds
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U2 - 10.1057/s42214-023-00161-4
DO - 10.1057/s42214-023-00161-4
M3 - Article
AN - SCOPUS:85159456872
SN - 2522-0691
VL - 6
SP - 276
EP - 305
JO - Journal of International Business Policy
JF - Journal of International Business Policy
IS - 3
ER -