Saudi Arabia’s Public Investment Fund (PIF) and the UAE’s ADQ scored highly in the Global Sovereign Wealth Fund’s (SWF) Governance, Sustainability and Resilience (GSR) report for 2023.
The 2023 GSR Scoreboard found that among the sovereign wealth funds it reviewed in 2022 and 2023, 69 got higher marks, 94 stayed the same and only 22 got lower marks.
Scoring was based on 25 different elements with 10 related to governance, 10 to sustainability, and five to fund resilience. The 2023 report rated 200 state-owned investors in 81 countries.
“The improvement has been most apparent among sovereign funds and around sustainability, as funds are increasing their impact activities and reporting them in a regular and meaningful way,” the latest report said.
Regional sovereign wealth funds
In the Middle East, the sovereign wealth funds that performed well and obtained improved GSR marks include Saudi’s PIF (+32 percent) and the UAE’s ADQ (+24 percent). Beyond the region, The Sovereign Fund of Egypt (TSFE) likewise obtained a +24 percent improvement rate on GSR.
In its report, SWF recognized the PIF for making its growth sustainable by implementing international best practices. According to the GSR, PIF’s annual report is “a rare display of transparency”. It also scored highly for its governance initiatives such as asset allocation and its “net zero by 2050” commitment.
Meanwhile, ADQ was also lauded for providing substantial details on its initiatives and achievements, especially in terms of sustainability. Ahead of COP28, scheduled in UAE later this year, Abu Dhabi’s SWF wants to set an example by aligning national priorities with SDGs.
For TSFE, the GSR report acknowledged the sovereign wealth fund’s improved governance practices by reporting details on its initiatives, such as the establishment of the SWF Law. It also improved its score by performing well in multi-sector investments and contributing to Egypt’s GDP.
Importance of sustainability
Finally, the report said that “pressure to achieve sustainability goals is having an impact on the investment preferences of sovereign investors.”
According to SWF, state investors invested more in renewable energy and other green assets than in oil, gas and mining. In the first half of 2023, that represented $16.2 billion invested in green energy, compared to $2.6 billion in traditional energy.
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