In a recent article of Business World, one of the biggest, yearly investor surveys has revealed an increasing behavioral shift in central banks, sovereign wealth funds, as well as public pension funds towards “greener and more activist investment strategies.”
The survey in question is the Global Public Investor survey. It was conducted by the Official Monetary and Financial Institutions Forum (OMFIF) think-tank for the purpose of determining how the COVID-19 pandemic and other long-term factors have been influencing the investment behavior of institutions managing large sums of money.
For its sample, the survey had participation from 102 institutions which together managed this year a total of $7 trillion. According to Danae Kyriakopoulou, the Chief Economist of OMFIF, “There has definitely been an acceleration due to COVID.”
Danae goes on to say, “At the beginning [of the pandemic], we thought there would be a focus on the short-term, the quick boosts to recoveries. But actually, there has been this realization that our financial systems are so vulnerable to things outside the financial world.”
The survey showed that a majority of global public investors across all three categories have begun implementing sovereign wealth funds. Typically such funds are used by a nation when it is in a ‘period of upheaval’ or by private citizens for the storing of wealth for the benefit of descendants.
60% of the survey’s sample was made up of central banks. Out of that number one-third now hold green bonds. However, some of those banks have complained about the green bonds’ liquidity and shortness of supply.
The survey also revealed an increasing trend for active ownership. This was especially the case for public pension and sovereign wealth funds. More funds are purchasing companies or projects that transition from irresponsible, non-sustainable practices to cleaner, sustainable practices.
At the same time, the survey discovered that 60% of GPIs did not implement ESG benchmarks. Far less, merely 8%, possessed bespoke benchmarks.