The Global Sustainability Footprint of Sovereign Wealth Funds

55 Pages Posted: 10 Jan 2020 Last revised: 20 Jan 2020

See all articles by Hao Liang

Hao Liang

Singapore Management University - Lee Kong Chian School of Business

Luc Renneboog

Tilburg University - Department of Finance; European Corporate Governance Institute (ECGI); Tilburg Law and Economics Center (TILEC)

Date Written: December 15, 2019


With the emergence of sovereign wealth funds (SWFs) around the world managing equity of over $8 trillion, their impact on the corporate landscape and social welfare are being scrutinized. This study investigates whether and how SWFs incorporate environmental, social, and governance (ESG) considerations in their investment decisions in publicly listed corporations, as well as the subsequent evolution of target firms’ ESG performance. We find that SWF funds do consider the level of past ESG performance as well as recent ESG score improvement when taking ownership stakes in listed companies. These results are driven by the SWF funds that do have an explicit or implicit ESG policy and are most transparent, and by SWF originating from developed countries and countries with civil law origins. In relation to engagement, we find by means of two natural experiments with exogenous shocks (the Deep Water Horizon catastrophe and Volkwagen Diesel scandal) that the ESG scores do not change significantly more for firms in which SWFs have ownership stakes. This potentially suggests that SWFs in general do not actively steer their target firms towards higher levels of ESG.

Keywords: sovereign wealth funds, institutional ownership, corporate social responsibility, socially responsible investments, sustainability, shareholder engagement, ESG, environmental policy, social policy, corporate governance, exogeneous shock

JEL Classification: G11, G18, G15, G28, Q01, M14

Suggested Citation

Liang, Hao and Renneboog, Luc, The Global Sustainability Footprint of Sovereign Wealth Funds (December 15, 2019). European Corporate Governance Institute – Finance Working Paper No. 647/2019. Available at SSRN: or

Hao Liang

Singapore Management University - Lee Kong Chian School of Business ( email )

469 Bukit Timah Road
Singapore 912409


Luc Renneboog (Contact Author)

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Warandelaan 2
5000 LE Tilburg
+13 31 466 8210 (Phone)
+13 31 466 2875 (Fax)

European Corporate Governance Institute (ECGI)

B-1050 Brussels

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
PlumX Metrics