Wealth funds ignoring their own principles

The world’s largest sovereign wealth funds (SWFs) have been accused of failing on CSR principles agreed one year ago.

The most important signatories to the Santiago Principles, a voluntary code for SWFs, have shown ‘little analysis’ of risk, with only ‘rare’ instances of ‘meaningful disclosure’, according to a new report.

The 24 principles require SWFs to ‘clearly define their ethical standards’ and communicate them to their governing bodies, management and staff. However, despite the establishment this summer of the International Forum on SWFs (EP11, issue 2, p7) as a permanent body to monitor the principles, most of the ten largest wealth funds still show ‘low levels of compliance with the Santiago Principles’ and no interest in CSR risks.

The survey, by the Investor Responsibility Research Center Institute and RiskMetrics, claims to be ‘the first comprehensive report to provide benchmarking of the levels of transparency and opacity at the funds’.

Afshin Mehrpouya, a senior analyst at RiskMetrics and the report’s co-author, said: ‘Many SWFs are long-term investors who should have interest in the level of integration of such risk. But none of them showed strategic interest in these criteria.’ However, he added that many did practise ‘negative screening according to national values’.

Funds deemed the most compliant with the principles were the Australian Government Future Fund and Norway’s Government Pension Fund. The Qatar Investment Authority was judged to be the least compliant.