Sustainability integration by public pension and sovereign wealth funds, 2022

Year published
Sustainability Integration Strategy

Institutional investors can exert significant influence over their investees and the sustainable investment market through both the size of their holdings and the active nature of their ownership. Public pension funds (PPFs) and sovereign wealth funds (SWFs) have long-term obligations and investment horizons. This puts them in a unique position to contribute to the Sustainable Development Goals (SDGs) and take action on sustainability risks, especially climate change. Despite this potential, more than half of the world’s 100 largest PPFs and SWFs do not disclose or report on sustainability issues, and institutional investors as a group can do more to mainstream sustainability.

This study examines ESG and sustainability integration in the investment practices of the world’s 100 largest funds, accounting for $22 trillion in assets under management (AUM).By reviewing the sustainability reporting of 47 ‘frontrunner’ funds, the study identifies a rich pool of good practices for sustainability integration in six strategic areas: governance, corporate sustainable investment policies, sustainability integration strategies, ESG integration along the investment chain, climate action, and evaluation and reporting. The findings of the report and best practice cases will also contribute to UNCTAD guidance (UNCTAD, forthcoming) on sustainability integration for institutional investors, with a particular relevance for developing countries.