Sovereign Wealth Funds (SWFs) are state-owned investment funds with combined asset holdings that are fast approaching four trillion dollars. Recently emerging as a major force in global financial markets, SWFs have other distinctive features besides their state-owned status: they are mainly located in developing countries and are intimately tied to energy and commodities exports, and they carry virtually no liabilities and have little redemption risk, which allows them to take a longer-term investment outlook than most other institutional investors.
Edited by a Nobel Laureate, a respected academic at the Columbia Business School, and a longtime international banker and asset manager, this volume examines the specificities of SWFs in greater detail and discusses the implications of their growing presence for the world economy. Based on essays delivered in 2011 at a major conference on SWFs held at Columbia University, this volume discusses the objectives and performance of SWFs, as well as their benchmarks and governance. What are the opportunities for SWFs as long-term investments? How do they fulfill their socially responsible mission? And what role can SWFs play in fostering sustainable development and greater global financial stability? These are some of the crucial questions addressed in this one-of-a-kind volume.
This book is an excellent in-depth exploration of how the wealth of future generations can be put to use in addressing the critical issues of our time. Having gone from foe to friend in the global financial crisis, sovereign wealth funds now clearly have an important role to play in improving governance, preserving the planet, sustaining global financial stability, and ensuring long-term growth.
Erik Berglof, chief economist and special adviser to the president at the European Bank for Reconstruction and Development
This book is an excellent and in-depth exploration of how to look at the wealth of future generations with respect to the critical issues of our time. Clearly long term investors and sovereign funds have a prominent place in our shared global values to preserve the planet and to build a more sustainable future.
Robert Tessier, Chairman of the Board of Caisse de dépôt et placement du Québec
SWFs now have major opportunities that are too good to miss - investing for the long term and investing in low-carbon technology. This book provides a road map for actions which can accelerate sustainable investment whilst helping the world manage the macroeconomic crises facing this decade and managing potential future crises of climate change.
Nicholas Stern, London School of Economics and former chief economist of the World Bank
1. Keynote Addresses
Sovereign Wealth Funds -- Distinguishing Aspects and Opportunities
The Contribution of Institutional Investors to Fostering Stability and Long-Term Growth
Sovereign Wealth Funds as Stabilizers
Financing Long-Term Investments After the Crisis: A View from Europe
What Sovereign Wealth Funds Can Do to Alleviate Global Poverty
The Sovereign Debt Problem
2. The State of Sovereign Wealth Funds
The Rationale for Sovereign Wealth Funds from a Development Persepective
Sovereign Wealth Funds: Form and Function in the Twenty-first Century
3. Benchmarking and Performance Standards
Tilt of Benchmarks
Four Benchmarks of Sovereign Wealth Funds
Which Financial Benchmarks and Other Incentives Work for Long-Term Investing?
Panel Paper: The Four Benchmarks of Sovereign Wealth Funds
4. Fostering Development Through Socially Responsible Investment
Impact Investing: A New Asset Class and Its Implications for Sovereign Wealth Funds
Sovereign Wealth Funds as Catalysts of Socially Responsible Investing
Objectives and Ethical Guidelines of Norges Bank Investment Management
Building Emerging Countries' Financial Infrastructure and Investing in Microfinance
5. Expanding Investment Horizons: Opportunities for Long-Term Investors
How to Reward Long-Term Investors
Sovereign Wealth Funds and the Shifting Wealth of Nations
Compensation and Risk-Taking in the U.S. Financial Industry
Building Long-Term Strategies for Investment of Sovereign Wealth
Panel Paper: Capital Access Bonds -- Securities Implementing Countercyclical Investment Strategies
Panel Paper: L-Shares -- Rewarding Long-Term Investors
6. Reducing Climate Risk
Influencing Clean Innovations
The Emerging Role of State Investors in the Governance of Global Corporations
The Rise of Carbon-Free Technology
Smart Energy Globalization
7. Managing Risk During Macroeconomic Uncertainty
Macroeconomic Uncertainty and Managing Risk for Sovereign Wealth Funds
Funds and Volatility
8. Manging Commodity Price Volatility
Managing Commodity Price Volatility
Chile and Copper
Management of Commodity Price Risks on Sovereign Balance Sheets
Panel Paper: Managing Commodity Risk -- Can Sovereign Funds Help?
9. Sovereign Wealth Funds and World Governance
Reconciling Sovereignty, Accountability, and Transparency in Sovereign Wealth Funds
Sovereign Wealth Funds: Perhaps We See What We Want to See
Restrictions on Cross-Border Investment
The Value of Transparency
Maximizing Autonomy in the Shadow of Great Powers
Conclusion: Taking Stock -- Analytical Challenges and Directions for Future Research
About the Conference Organizers