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An analysis of sovereign wealth and pension funds' ethical investment guidelines and their commitment thereto

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  • Ole Alexander Jensen
  • Peter Seele

Abstract

Sovereign wealth and pension funds make use of investment guidelines as they invest for substantial part public money also, and thus, are subject to greater public scrutiny and expectations of environmental sustainability than privately owned funds. Thus informed, this article studies 13 sovereign wealth and pension funds selected by their appearance in the Truman scoreboard as having ethical investment guidelines addressing social and environmental issues. To analyse the ethical investment guidelines, the investigation first determines whether or not the selected funds conform to the Global Compact (RQ1). The investigation then determines if the selected funds also make use of sanctions to bring their ethical guidelines to bear (RQ2). The findings of the quantitative content analysis of the funds' ethical guidelines reveal that a quarter per cent of the funds fully adhere to the Global Compact. One of the funds ensures their ethical guidelines are put into practice by sanctions as exclusions from the fund by divestment. Finally, the authors arrive at the conclusion that only funds with published investment guidelines and applicable sanctions may influence corporate behaviour, and thus, take up their (as well as their investments') social and environmental responsibilities.

Suggested Citation

  • Ole Alexander Jensen & Peter Seele, 2013. "An analysis of sovereign wealth and pension funds' ethical investment guidelines and their commitment thereto," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 3(3), pages 264-282, July.
    • Handle: RePEc:taf:jsustf:v:3:y:2013:i:3:p:264-282
    DOI: 10.1080/20430795.2013.791144
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    Cited by:

    1. Martinez-Oviedo, Raul & Medda, Francesca, 2017. "Assessing the effects of adding timberland and farmland into resource-based Sovereign Wealth Fund portfolios," Journal of Economics and Business, Elsevier, vol. 91(C), pages 24-40.
    2. Maria Carolina Rezende de Carvalho Ferreira & Vinicius Amorim Sobreiro & Herbert Kimura & Flavio Luiz de Moraes Barboza, 2016. "A systematic review of literature about finance and sustainability," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 6(2), pages 112-147, April.
    3. Peter Seele & Marc Chesney, 2017. "Toxic sustainable companies: a critique on the shortcomings of current corporate sustainability ratings and a definition of ‘financial toxicity’," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 7(2), pages 139-146, April.

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