Middle East SWFs Improve Vastly in GSR Scoreboard

Middle Eastern Sovereign Wealth Funds (SWFs) have experienced the largest improvement in Governance, Sustainability and Resilience (GSR) scores globally, from 32% in 2020 to 48% in 2024, despite the inclusion of stricter sustainability elements this year, Global SWF, a data platform that tracks over 400 SWFs and Public Pension Funds (PPFs) providing insights on the top 100 funds, said in its 2024 GSR Scoreboard.

The most positive trajectories this year have been observed in Israel’s CIF, which continues to grow and to improve its best practices, and in Turkey’s TVF, which paid special attention to enhancing ESG and risk management. Abu Dhabi’s ADQ saw its governance score increase significantly too, thanks to their recent bond prospectus.

As far as the 22 SWFs from the GCC, which manage $5.2 trillion in assets, there was a significant improvement, with nine of those funds scoring better this year.

Saudi Arabia’s SWF – Public Investment Fund (PIF) continues to lead the charge in the Middle East and North Africa (MENA) region, and has come a long way, increasing its score from 28% in 2020, to 96% till date.

The Saudi fund publishes on a voluntary fashion an allocation and impact report and a self-assessment to the Santiago Principles, despite not being an IFSWF member. Abu Dhabi’s Mubadala is following closely and will be publishing its first annual impact report in the second half of 2024,

Global SWF said.

Chad Richard, Head of Strategy Development and Innovation of PIF, said that the report reinforced PIF’s status as one of the world’s leading impactful and responsible investors, with world-class governance and sustainability practices.

He said that the Saudi Fund has led the way in supporting the clean energy transition globally. It has held the largest ever voluntary carbon credit auctions globally with 3.6 million credits sold to international companies.

“PlF is also the first SWF to issue green bonds, including the first-ever century green bond, with a combined value of $8.5 billion; and the first fund in the region to commit to targeting net zero by 2050. PIF continues to invest in a cleaner and more resilient economy, driving sustainable growth within domestically and globally,” he said.

Canadian PPFs Lead

The overall ranking is led by two Canadian pension managers (British Columbia’s BCI and Québec’s CDPQ), and three sovereign wealth funds (Ireland’s ISIF, Singapore’s Temasek, and New Zealand’s NZ Super).

Following the five leaders is a group of nine high-scoring institutions are two from North America (CPP, OTPP), three from Europe (NBIM, KENFO, COFIDES), one from the Middle East (PIF), one from Africa (NSIA), and two from Australia (Aware Super and REST Super).

The presence of the Saudi Arabian SWF is a testament of the efforts that some of the Middle Eastern funds are undertaking to spearhead best practices in the region.

In all, the SWFs deployed $64.2 billion in 135 deals, while PPFs spent $31.9 billion in 101 deals. Investments are fewer, but larger on average, and the overall average size of $410 million per deal is the largest we have seen in many years.

Furthermore, state-owned Investors (SOIs) continue to operate in an environment of high volatility and market uncertainty.

However, the rally on global equities has been quite significant in the first six months of 2024, with both the S&P 500 and Nasdaq reaching new historical peaks on June 18, and the S&P 1200 Global rising another +11.6% this year so far.

The rise in bonds and hedge funds has been more modest, with +0.5% and +5.5%, respectively. Measuring private markets is always trickier, but the related benchmarks provide us with some sense, with private equity and infrastructure rising moderately, and real estate falling -5.5% when compared with December 2023, Global SWF said.