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9 Dec 2009

Added Focus on Sovereign Wealth Funds Illuminates Interconnectivity of ‘The New Normal’ of Capital Markets

RiskMetrics Group’s recent report on ten of the world’s Sovereign Wealth Funds and their disclosure practices significantly illuminates the interconnectivity – connecting the dots – of ESG and Sustainability, Corporate Responsibility, Investor Responsibility and other aspects of the ”new normal” of the capital markets and the corporate environment, according to the Governance & Accountability Institute.

The G&A Institute tracks the major players in Sovereign Wealth Funds and ESG/Sustainable investing (environmental, social and governance Key Performance Indicators), and select US Public Sector Employee Investment Funds.

In a “Perspectives & Insights” communiqué to its clients, the G&A Institute detailed RiskMetrics’ rise and ever-expanding presence as a third party advisor beyond its already formidable role as a major player worldwide in corporate proxy season activities, including advising on corporate governance issues and assisting asset owners and managers in voting their proxies.

According to G&A Institute Chairman Hank Boerner: “We see this as part of the trend of accelerating the embrace of ESG and Sustainability among many more asset owners – which will have profound effects on corporate issuers. Stay tuned to ESG and RiskMetrics’ actions – in the company’s traditional spheres of influence, and now, with the recent moves, in the areas of ESG / Sustainability Investment and the activities of a powerful group of investors – the Sovereign Wealth Funds!

Noted the G&A Institute: “RiskMetrics is a major player worldwide in corporate proxy season activities, including advising on corporate governance issues and assisting asset owners and managers in voting their proxies. In 2009 the company bought the business of Innovest Strategic Investment Advisors and in November, the business of KLD Research and Analytics, Inc. Both moves move RiskMetrics firmly into the pantheon of global ESG / Sustainability research organizations.”

Recently RiskMetrics established its presence in the emerging (and increasingly more important) universe of sovereign investors, and especially Sovereign Wealth Funds. RiskMetrics and its affiliated Investors Responsibility Research Center (IRRC) are examining the transparency and disclosure practices of these investors.

As the sovereign investors (nation-states, city-states, regional coalitions, public sector pension funds, and related institutions) direct their strategic investments in other countries – by definition, SWFs are public sector monies invested outside of the home country – questions are raised about these investments, and whether the investors are transparent enough (most are not is the general opinion).

The RiskMetrics/IRRC Institute study found the following:

  • Half of the top 10 largest SWFs have achieved a relatively high level of disclosure;
  • Other funds have yet to adopt meaningful initiatives to improve compliance with the voluntary code of conduct;
  • While the aggregate size of the top 10 SWFS is USD$2.2 trillion, the actual impact on international markets has been smaller at USD$1 trillion.

The full report is “An Analysis of Proxy Voting and Engagement Policies of the SWFs,” available at: and

The SWFs covered in the report: the funds of Abu Dhabi, Australia, China (2), Singapore (2), Kuwait, Libya, Russia, and Qatar.

About Governance & Accountability Institute
Governance & Accountability Institute, Inc. ( provides timely news, actionable research and information, perspectives and opinion, reliable data, and customized advisory services to organizations, institutions and individuals seeking to do the right thing for the right reasons. INSIGHTS-edge is the Institute’s Web-based platform, available to subscribers and clients to identify, understand, track and engage with third party organizations that are shaping the capital markets and the corporate environment through their focus on key sustainability factors.