Professor Schena: Sovereign funds are among the world’s largest investors. However, as a group they are not monolithic, i.e. they do not behave similarly. Countries that invest externally are very sensitive to long-term risk. Hence, they have begun to integrate more ESG themes into their portfolios, especially climate related themes. These countries are usually among the largest in scale. I fully expect that over time, they will be more proactive in taking leadership roles and bringing more impact into their investment processes. Recently, several sovereign wealth funds have joined together to establish the One Planet Initiative which is committed to open global dialog and action to reduce the level investment risk posed by climate change.
Loosely, a second group of sovereign funds is focused on investing domestically. These are funds that must serve a national leadership role by promoting sustainable domestic impact that complements other goals including, for example, financial inclusion, economic growth, and so on.