Sovereign Wealth and Pension Funds : Conceptualizing Implications for « Responsible Investment »

This paper examines the recent growth of sovereign wealth funds (SWFs), their potential impact on corporate governance, and their impact on what has come to be known as responsible investment (RI). Responsible investment encompasses aspects which may materially affect firm valuation from environmental, social and governance impacts, collectively known as ESG (environmental, social and governance) factors. The paper fills a gap in the recent literature on SWFs in terms of their significance for RI/ESG considerations. We view SWFs in the context of the growth of other forms of government investment funds, in particularly the growth of sovereign pension funds (SPFs), through mid-2008. It provides a new typology for classifying SWFs and the likely evolution of such funds based on this typology and RI/ ESG considerations.