The Responsible Asset Allocator Initiative (RAAI) is core part of the Bretton Woods II (BWII) effort to help large asset allocators reduce risks and optimize returns through strategic investments in responsible investing and sustainable development. BWII chose to focus on Sovereign Wealth Funds (SWF) and Government Pension Funds (GPF) for the RAAI for a variety of reasons. First, the assets of this community, comprising tens of trillions of dollars, dwarf all other pools of capital worldwide. When they shift behavior, SWF and GPF exert a gravitational pull on other investors, companies, and projects. With their scalable assets, large internal resources and in-house capabilities, SWF and GPF don’t need to accept the world as we see it and can have a substantial influence on sustainable development outcomes. It is worth noting that just a one percent allocation of the AUM of the 121 SWF and GPF evaluated under the RAAI would be greater than all Official Development Assistance (ODA) dispensed in 2016.
SWF and GPF also invest over generations and have a natural long-term horizon that is consistent with the goals and objectives of sustainability. In addition, with a high AUM to asset-holder ratio, and a close relationship with their respective governments, many of whom are signatories to the SDG, coordination can be efficient and effective. Finally, in terms of alignment, long-term asset allocators are among the investor groups that have the biggest stake in reducing global systemic risks and improving sustainable development.