The RAAI Leaders List and Index

The 2019 RAAI Leaders List: The 25 Most Responsible Asset Allocators is comprised of the 25 top scoring funds in the RAAI Index as rated against 10 core principles and 20 criteria for responsible investing practices (see Principles and Criteria for more). The Leaders were selected from the 197 sovereign wealth funds and government pension funds that were rated and include six SWF, 18 GPF and one global fund (as a multilateral institution, the UNJSPF is classified as a global fund). The Leaders stand out for their commitment to responsible, long-term investing, integration of ESG risks into their portfolio decision-making process, and leadership in reflecting saver’s preferences on key issues such as climate change, gender equality, fair labor practices, sustainable infrastructure, education, and healthcare.

Together, this impressive group of Leaders on responsible investing have a combined AUM of $5.9 trillion, and individual funds ranging from a low of $26 billion to a high of nearly $1.5 trillion in assets.

To put this in context, the combined asset base of this group is larger than the GDP of every country but the United States and China. The Leaders List is diverse with asset allocators from four major geographic regions: the Americas (Latin and North America), Asia (Central Asia, East Asia and Australasia), EEMEA (Eastern Europe, Middle East and Africa) and Europe (Europe and Other), 13 countries and one global fund.¹

Europe is the most well-represented continent, including 10 asset allocators that comprise over 40 percent of AUM in the Leaders List. European Leaders include three from France, two each from the Netherlands and the United Kingdom, and one each from Denmark, Norway, and Sweden. North America is second, with eight funds in the Leaders List (together comprising 26 percent of assets), including five from Canada—the country with the highest number of Leaders—and three from the United States. Asia has five asset allocators on the Leaders List, with two from Australia, and one each from Japan, Malaysia, and New Zealand. Asian funds represent only 20 percent of the Leaders but comprise almost 30 percent of total assets. Lastly, the EEMEA region had but one representative on the Leaders List—a South African government pension fund with $150 billion in assets.

Regional Composition of Leaders

Update at 4:15pm, May 13, 2019. This report has been corrected to fix the ratings of Government Pension Fund – Global (Norway) and Government Pension Fund (Thailand), which were mistakenly swapped previously, on the Responsible Asset Allocator Index table.   

The Leaders List funds scored significantly higher than other rated funds on the index, providing a benchmark of excellence for the broader asset allocator community. Note that the Finalists—the funds that ranked 26-50 on the index—were not far behind in terms of scoring performance. Of the 197 rated funds, the Leaders scored an average of 96 points (out of 100), while the Finalists scored an average of 89 points. The rest of the 147 rated funds only scored an average of 33 points.

Performance on key criteria shows a stark difference between the responsible investing practices of the Leaders and Finalists and the rest of rated funds, indicating that much work remains to be done. For example, every Leader and Finalist has:

• issued a statement on their responsible investing policies in their annual reports or websites, compared with only 42 percent for the rest of funds.
• joined partner organizations to learn about best practices and share knowledge on responsible investing, compared with 43 percent for the rest of funds.
• integrated environmental social and governance risks into their investment decision-making process, while only 24 percent of the rest of funds do so.

These are relatively straightforward criteria, and it is surprising that so many funds rate poorly on them, in the opinion of the reviewers.

Note, Leaders and Finalists also have room for improvement. For example:

• On the Principle of Development, Criteria 10B—Investing in frontier markets and following responsible investing practices while doing so—the rest of funds scored an average of 24 percent. However, the Leaders and Finalists, with average scores of 60 percent and 48 percent respectively, could do much better.
• On criteria 10A—Referencing the SDGs in the annual report or website—the rest of funds scored a shockingly low 4 percent average, while the Leaders and Finalists scored an average of 76 percent and 36 percent respectively.
• Only 88 percent of Leaders and 56 percent of Finalists have a downloadable report with details on their responsible investing practices. While relatively good scores, we expect nothing less than 100 percent on this criteria going forward.

How the Leaders Stack Up Against the Rest: Identifying Coverage Gaps