Pension Funds, Sovereign-Wealth Funds and Intergenerational Justice

13 Pages Posted: 5 Oct 2012

See all articles by Alexander W. Cappelen

Alexander W. Cappelen

Norwegian School of Economics (NHH) - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Runa Urheim

Central Bank of Norway

Date Written: September 27, 2012

Abstract

Pension funds and sovereign-wealth funds own a large and increasing fraction of the shares in publicly traded companies in the OECD area. These funds typically have a very long time horizon on their investments, as well as highly diversified portfolios. These features imply that the interests of these funds on important issues are aligned with the interest of future generations because the longterm return on a highly diversified portfolio will depend on the degree to which the development of the world economy is sustainable. It is, therefore, in the enlightened self-interest of these investors to use their shareholder rights so as to protect the interest of future generations. The paper explores the arguments for a more active corporate governance policy among pension funds and sovereign-wealth funds and discusses the obstacles to such policies.

Keywords: Pension funds, sovereign funds, future generations, corporate governance

JEL Classification: G20, G34

Suggested Citation

Cappelen, Alexander W. and Urheim, Runa, Pension Funds, Sovereign-Wealth Funds and Intergenerational Justice (September 27, 2012). NHH Dept. of Economics Discussion Paper No. 19/2012, Available at SSRN: https://ssrn.com/abstract=2156964 or http://dx.doi.org/10.2139/ssrn.2156964

Alexander W. Cappelen (Contact Author)

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Runa Urheim

Central Bank of Norway ( email )

P.O. Box 1179
Oslo, N-0107
Norway

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