The Responsible Asset Allocator Initiative at New America seeks to mobilize large pools of capital toward responsible investing, and supports the United Nations Sustainable Development Goals. The RAAI focuses on Sovereign Wealth Funds and Government Pension Funds—a group of institutional investors that have the scale, scope, and inclination to make a positive impact in this space.

Together, these asset allocators manage over $30 trillion of assets on behalf of savers in their respective nations, to help ensure their financial security and to pay for their retirement, healthcare, and long-term savings needs. Sovereign wealth funds and government pension funds are accountable to their contributors and beneficiaries, who in addition to wanting stable returns, are interested in issues related to the SDG: climate action, gender equality, innovative sustainable infrastructure, education, and healthcare.

SWF and GPF are particularly well-suited to be trailblazers in responsible investing and sustainable development, given their long-term investment horizons (that often span generations), scalable assets, large internal resources, and investment capabilities. Where sovereign wealth funds and government pension funds go, companies and capital markets often follow.

While there is general consensus among academics and practitioners on the importance of responsible investing to long-term value creation, some asset allocators still face challenges integrating ESG considerations into their investment portfolios. Although numerous ESG tools exist, they are often onerous and complicated to implement, and they are not customized for the needs of the asset allocator community.

This is where the Responsible Asset Allocator Initiative comes in. The RAAI provides a benchmark of asset allocator best practices, enables knowledge-sharing among peers, and helps set a policy agenda and advocacy program to mobilize more capital into responsible investments. Asset allocators already are shifting investment practices to achieve financial goals without extracting social and environmental value. The notion of investing people’s savings in companies that pollute the environment or that employ child labor, in order to make an extra ten cents of returns, is going away. While supporting this trend, the RAAI takes the next step: helping asset allocators to add social and environmental value in line with the preferences of savers, while generating the risk-adjusted returns they require.

Principles and Criteria

As part of the RAAI, New America partnered with the Fletcher School at Tufts University to analyze and rate almost 200 sovereign wealth funds and public pension funds against principles and criteria for responsible and sustainable investing. RAAI constantly seeks to refine its processes and outputs. As a result, researchers increased the number of criteria for evaluation from 12 in 2017 to 20 in 2019 with two criteria per each of the 10 principles: Disclosure, Intention, Clarity, Integration, Implementation, Commitment, Accountability Partnership, Standards, and Development.

By assessing and scoring the performance of asset allocators against these principles, and highlighting the performance of the Leaders (the 25 highest scoring sovereign wealth funds and government pension funds), RAAI provides a benchmark of peer excellence that serves as a catalyst for responsible investing among the broader community.

The 10 core principles and 20 associated criteria were selected based on discussions with asset allocators and from guidelines by multilateral institutions and agreements across the field of ESG and sustainability, including, but not limited to, the Principles for Responsible Investing (PRI), the United Nations Global Compact (UNGC), the OECD Principles of Corporate Governance, regional and global sustainable investment forums (Eurosif, RIAA, GSIA), the Investor Network on Climate Risk (INCR/CERES), the UN Sustainable Development Goals and the International Forum on Sovereign Wealth Funds (IFSWF).

The 10 principles and 20 criteria can be reviewed below.

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