Sovereign wealth funds push for sustainable economic growth

Over 35 sovereign wealth funds (SWFs) and long-term investors with over $9 trillion in assets are meeting in Paris this week to discuss how long-term investors can reduce the risks to society of continuing financial, climate, and development crises.

The Sovereign Wealth Fund Research Initiative at University Paris-Dauphine and the Committee on Global Thought at Columbia University have organised a two-day conference entitled “From Savings Glut to Sustainable Growth”.

Academics, policy makers and fund managers, including Lord Nicholas Stern and Nobel Prize winner Joseph Stiglitz are attending the conference.

The attendees’ collective aim is to decide how SWFs, with combined assets that exceed the annual GDP of most of the G8 national economies, can combine efforts to deliver long-term profit with socially responsible investment, protecting the financial and physical wealth of the planet.

The conference will also address issues with SWFs’ public image as they are commonly perceived as a threat instead of opportunity for the development of public good in recent years.

Joseph Stiglitz, 2001 Nobel Laureate for economics and co-chair of the Committee on Global Thought at Columbia University, argued that “sovereign wealth funds provide the kind of long-term investment that will be crucial to tackling the critical challenges that global capitalism faces today.”

Stiglitz added that SWFs can generate high long-term returns for the citizens to whom they are accountable, promote the common good by being socially responsible and provide a valuable weapon in the fight against climate change. Stiglitz will be a keynote speaker at the conference.

Also attending is former US vice-president Al Gore, who argued that the world’s sovereign wealth funds must take a longer-term investment view in order to realize their full potential in building a more sustainable economic system and in providing responses to the multiple financial, climatic, and demographic challenges we will face in coming decades.

“There are a number of innovative ideas to accomplish this goal, like loyalty shares, which help transform academic research on long-term and sustainable investment into a useful mechanism for investors–and we are going to need to bring a range of ideas to the table,” Gore said.

The conference is sponsored by French asset management group Amundi. Yves Perrier, chief executive of Amundi and head of asset management, securities and investor services at Crédit Agricole, criticised the “short-termism” of financial markets which in turbulent times “creates a need for stability that can only come from long-term investors.”

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