Temasek, CDPQ, NZ Super and NSIA top latest GSR scoreboard
Since its inception in 2020, Global SWF’s governance, sustainability, and resilience (GSR) report is increasingly being adopted as a guiding framework for best practices among sovereign and pension funds.
The scorecard is independent, quantifiable, and objective, based on publicly available information. It assesses progress over time using 25 elements related to governance, sustainability, and resilience. Each element is answered with a Yes or No, given equal weight, and converted into percentage points by Global SWF.
Temasek, the largest investor with a perfect score, leads the overall ranking. This Singaporean entity, which is nearly 50 years old, is highly respected and serves as a model for governments worldwide.
Alongside the Singaporean sovereign investor, three other funds have also achieved a perfect score: Caisse de dépôt et placement du Québec (CDPQ); New Zealand Superannuation (NZ Super); and Nigeria’s Sovereign Wealth Fund which took over from ECA in 2012.
The $304 billion Canadian pension fund always aims to take concrete steps for present and future generations of its members, a spokesperson for CDPQ told AsianInvestor.
“Incorporating governance, sustainability and resilience practices into our investment process helps us assess the long-term viability of a company and better understand the risks it faces to create value that meets the needs of our depositors, while contributing to the development of a strong Québec economy,” they said.
NZ Super
The $40 billion NZ Super Fund was also recently assessed by Global SWF as having demonstrated the best financial performance over the past decade.
“The GSR result further validates our belief that we can advance sustainability outcomes while fulfilling our financial purpose and delivering strong returns and recognises the hard work and capability of our investment team,” Lucas Kengmana, senior investment strategist, NZ Super told AsianInvestor.
Temasek did not respond to AsianInvestor regarding the GSR results at the time of this article’s publication.
SOVEREIGN IMPROVEMENT
There has been significant increase in the overall GSR scores across funds from 59% in 2022 to 63% this year, according to Diego Lopez, managing director of Global SWF.
“One of the main drivers behind this improvement is the growing attention that funds are paying to the Global SWF Ranking GSR system and its encompassing aspects,” Lopez told AsianInvestor.
Global SWF
Lopez emphasized that as funds become more transparent and accountable, publish sustainability reports with specific metrics, and hire operational risk teams, they inevitably become better-run organisations and score higher on the GSR scoreboard.
When asked about how sovereign funds are catching up quickly with pension funds, Lopez provided an example in the Asian context.
“While three Korean pension funds (NPS, KTCU, POBA) have seen their scores decrease or remain the same due to their lack of new publications and failure to seek better practices, the Korea Investment Corporation (KIC) has been working alongside Global SWF and has published comprehensive sustainability reports that have complemented their governance and sustainability efforts,” said Lopez.
FUND FEEDBACK
Regarding the future evolution of the GSR Scoreboard, Lopez stated that the first two editions included 100 funds, which expanded to 200 funds in 2022 and 2023, requiring extensive work to analyse 5,000 data points.
“There are no immediate plans to further expand the universe of funds, but adjustments may be made to certain elements of the scoring system,” said Lopez.
Over 30% of all the funds indexed in the report had reached out to Global SWF following the GSR list's first iteration to try and understand the system better and to improve their scores, he said.
“One such example could be Temasek, which in our first assessment in 2020 missed two points. During the past three years, they have expanded their section “Ins and Outs of Temasek” giving a lot of clarity to the citizenry about the sources and uses of their funds, and they have included an additional section to shed light on how the organisation is structured,” said Lopez
“These two small steps may not mean much in terms of achieving higher financial returns but we believe are important steps to becoming an even better run sovereign investor.”
The aim of creating the GSR scoreboard from the beginning has been to contribute to the industry's advancement in an independent manner.
“Some of these issues like macroeconomics, geopolitics, and demographics will persist, but sovereign investors might become more robust and resilient against them,” said Lopez.