Canada's Most Responsible Asset Allocators in 2021

Neil Hrab of OMERS sent me The 2021 Leaders List: The 30 Most Responsible Asset Allocators:

The Responsible Asset Allocator Initiative (RAAI) is focused on mobilizing capital from the world’s largest institutions toward responsible investing and the achievement of the United Nations’ Sustainable Development Goals (SDG). By developing our biannual RAAI Index, which provides the first comprehensive analysis of how the world’s largest long-term investors are developing sophisticated strategies to manage environmental, social, and governance (ESG) issues, we construct a window into the future of investing, a world where global savings institutions deploy funds not only to achieve financial returns, but also to address the broader social and environmental challenges we face today.

The Index, developed in partnership with the Fletcher School at Tufts University, analyzes and rates approximately 250 sovereign wealth funds (SWF) and government pension funds (GPF), comprising $26 trillion in assets, on their responsible investing (RI) practices. The RAAI publishes The Leaders List: The Most Responsible Asset Allocators, which this year ranks the top 30 scorers in the index, and also identifies the finalists, the next 22 highest scoring firms. Together this group of asset allocators (the top quintile) sets a global standard for leadership in responsible investing and provides a benchmark for the investment community to follow.

The RAAI rates funds for the Index based on 10 key principles and 30 criteria related to ESG and RI (see Methodology for more information). Since the RAAI launched in 2016, global asset owners have been upping their game on ESG, with the average global RAAI score reaching 52 percent in 2021, up from 48 percent in 2019 and 44 percent in 2017. In 2021, we’re seeing that Europe, especially Denmark, the U.K., and the Netherlands are at the forefront of RI implementation and innovation while the United States continues to lag behind. Overall, RI is advancing across the globe, but from a low base; there remains a large divide between the top quintile performers and the rest of the world.

Responsible investing is a critical component for solving complex, global challenges, and global asset allocators have the capacity to make a significant difference. When these institutions make investments, they exert a gravitational pull on capital markets and can drive funds towards fighting climate change, increasing sustainable infrastructure, and improving access to education, food, clean water, and healthcare. Through continually revising our criteria with each new edition of the Index and by adding to our universe of rated funds, the RAAI is evolving alongside ESG issues to drive innovation and leadership in responsible investing.

II. Asset Allocators, Principles, and Criteria

The RAAI focuses primarily on SWFs and GPFs (“asset allocators”)—a group of institutional investors that have the scale, scope, and inclination to make a positive impact on global ESG challenges.

Together, these asset allocators manage $36 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. SWFs and GPFs are accountable to their contributors and beneficiaries, who, in addition to wanting stable returns, want to make sure their savings have a positive impact on issues related to the SDG: for example, 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 SWFs and GPFs go, companies and capital markets tend to follow.

While there is a 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 sometimes, 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 excellence among 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 are already 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 over 250 SFWs and GPFs 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 20 in 2019 to 30 in 2021—with three 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 30 highest scoring SWFs and GPFs), RAAI provides a benchmark of peer excellence that serves as a catalyst for responsible investing among the broader community.

The 10 core principles and 30 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 (EurosifRIAAGSIA), the Investor Network on Climate Risk (INCR/CERES), the UN Sustainable Development Goals, the International Forum on Sovereign Wealth Funds (IFSWF), the Task Force on Clima (TCFD), Climate Action 100+, CDP Worldwide, GRESB, the Institutional Investors Group on Climate Change (IIGCC), and the Sustainability Accounting Standards Board (SASB).

The 10 principles and 30 criteria can be reviewed below.










III. The RAAI Index and Leaders List

The RAAI Index


The 30 Most Responsible Asset Allocators

The 2021 RAAI Leaders List: The 30 Most Responsible Asset Allocators is comprised of the 30 top-scoring funds in the RAAI Index as rated against 10 core principles and 30 criteria for responsible investing practices (see the Principles and Criteria section for more). The leaders were selected from the 251 rated asset allocators, including seven SWFs, 22 GPFs, and one global fund (as a multilateral institution, the UNJSPF is classified as a global fund). The leaders stand out for their commitment to responsible, long-term investing; integration of ESG risks into their portfolio decision-making process; and leadership in reflecting saver’s preferences on key issues such as climate change, gender equality, fair labor practices, sustainable infrastructure, education, and healthcare.

Together, this impressive group of Leaders on responsible investing have a combined assets under management (AUM) of $7.9 trillion, and individual funds ranging from a low of $2 billion to a high of nearly $1.4 trillion in assets.



To put this in context, the combined asset base of this group is larger than the GDP of every country but the United States and China. The leaders list is diverse with asset allocators from 15 countries and four major geographic regions: the Americas (Latin and North America), Asia (Central Asia, East Asia, and Australasia), EEMEA (Eastern Europe, Middle East, and Africa), and Europe (Europe and Other).

Europe is the most well-represented continent, including 16 asset allocators that comprise over 50 percent of AUM in the Leaders List. European Leaders include two from France, two each from the Netherlands and Denmark, five from the United Kingdom (the country with the highest number of Leaders), and one each from Ireland, Italy, Spain, and Sweden. North America is second, with seven funds in the Leaders List (together comprising 23 percent of AUM), including three from Canada and four from the United States. Asia has five asset allocators on the Leaders List, with three from Australia, and one each from Japan and New Zealand. Asian funds represent only 17 percent of the number of Leaders but comprise almost 25 percent of total assets. Lastly, the EEMEA region has one representative on the Leaders List—a South African government pension fund with $130 billion in assets.

Surveying RAAI Rated Asset Allocators by Country and Region

For the 2021 RAAI Index and Leaders List Report, our staff began by reviewing 634 asset allocators in 98 countries, with a total AUM of $37 trillion. After excluding duplicates, asset allocators that were too small or that did not have information available in the public domain (See Methodology section for more information on exclusions), our reviewers rated and ranked 251 asset allocators from 61 countries, with a total AUM of $26 trillion. The Responsible Asset Allocator Map below, an interactive display that highlights the geographic scope of RAAI’s coverage, shows key information on each rated entity including location, AUM, quintile ranking, and inception date.


Performance Analysis of the Leaders and Finalists

The leaders list funds (those funds ranked 1-30) scored significantly higher than other rated funds on the index, with an average score of 98 points (out of 100). No Leader failed to score on less than 29 out of 30 criteria, with 16 obtaining a perfect score, a remarkable achievement. The finalists (the funds that ranked 31-52 on the index) were not far behind, with an average score of 93 points. The finalists scored on at least 28 out of 30 criteria. Together, the leaders and finalists, the top quintile performers, provide a benchmark of excellence for the broader asset allocator community. The rest of the 199 rated funds only scored an average of 40 points.

Performance on key criteria shows a stark difference between the responsible investing practices of the leaders and finalists and the rest of world-rated funds, indicating that much work remains to be done. For example:

  • Ninety-four percent of leaders and finalists publish a standalone, downloadable report on their responsible investing practices, compared with only 17 percent for the rest of funds.
  • Ninety-eight percent of leaders and finalists hire dedicated staff for responsible investing and have internal resources to do the job effectively, versus 23 percent of all other rated funds.
  • One-hundred percent of leaders and finalists have joined partner organizations to learn about best practices and share knowledge on responsible investing, compared with 46 percent for the rest of funds.
  • One-hundred percent of leaders and finalists issue a statement on integrating ESG risks into their investment decision-making process and explain how they implement ESG in the portfolio, while the rest of world funds score 40 percent and 32 percent, respectively, on the same criteria.

These are relatively straightforward criteria, and it is surprising that the majority of world funds rate poorly on them, in the opinion of the reviewers.

Note, leaders and finalists also have room for improvement, scoring well below their total average score of 96 percent on select criteria. For example:

  • Under development, leaders and finalists show below-average scores. Only 90 percent of leaders and finalists reference the SDGs, only 85 percent show leadership on innovation in ESG, and just 78 percent invest in frontier markets and follow responsible investing practices while doing so. Accordingly, the average score for development at 86 percent, is the lowest among all principles for leaders and finalists.
  • In terms of accountability, 100 percent of Leaders and Finalists report progress toward meeting ESG targets, but only 86 percent report on the financial performance of their ESG investments.
  • Regarding implementation, 100 percent of leaders and finalists provide examples of ESG investments for their stakeholders in select categories, but just 90 percent are able to provide examples of responsible investments for all three ESG categories, and only 88 percent provide a benchmark for measuring the ESG performance of their responsible investments.

IV. Why the Leaders Matter

The total assets controlled by the top 30 funds on the Leaders List—$7.9 trillion—is…

  • Larger than the GDP of every country in the world except the United States and China
  • One-hundred times larger than the total commitments and disbursements made by the World Bank in 20201
  • Larger than the combined GDP of 145 countries2
  • Thirty-seven times bigger than all official development assistance (ODA) extended in 20203

Channeling just 1 percent of the total capital of the leaders toward responsible investing and related sustainable development goals would create a pool of resources…

  • Larger than the GDP of 139 countries4
  • Two times larger than total climate financing made by multilateral development banks (MDB) and the World Bank in developing countries in 2020
  • Almost four times all COVID-19 related financial support extended by the World Bank in 20205
  • Twice the amount of interest free loans and grants to the world’s poorest countries extended through the International Development Association (IDA) in 20206

The 30 asset allocators on the Leaders List…

  • Received an average total score of 98 (out of 100) on the Responsible Asset Allocator rating system; the minimum score needed to earn a spot on the list is 96
  • Represent funds from South Africa, Asia, Australasia, Europe, and North America
  • Punch above their weight, comprising 13 percent of the 251 total rated funds but 31 percent of total assets 

V. Key Findings: Are Global Asset Allocators Becoming More Responsible?

This is the third biannual RAAI Index, rating and ranking the world’s largest asset owners, (in 2021 comprising 251 institutions with $26 trillion in AUM), on their responsible investing practices. The RAAI index is the only comprehensive rating system in the world that monitors and measures the progress of global sovereign wealth and pension funds in deploying their capital responsibly and sustainably.

In this edition of the index, we have expanded our coverage from 197 to 251 asset owners, and raised the bar on performance by expanding the rating system from 20 to 30 criteria. Through the selection of the Leaders List and the top quintile performers, the RAAI provides a benchmark of excellence that supports asset owners to become effective responsible investors and to invest in the SDGs, including climate change, one of the greatest challenges our planet has ever faced.

Here are five key findings from this year’s RAAI Index:

  • Responsible investing is advancing across the world but from a low base. There is scope for substantial improvement.
  • The world’s largest asset allocators are driving progress globally on responsible investing.
  • Among developed economies, Europe, particularly Denmark, the U.K., and the Netherlands, are leading the way, with Australia/New Zealand and Canada not far behind.
  • The leaders and finalists continue to set the bar for responsible investing, widening the gap with the rest of the world.
  • The world’s two biggest economies, the United States and China—comprising 40 percent of global GDP—are lagging dangerously behind on responsible investing.

1. Responsible Investing is Advancing Steadily Around the World

At the RAAI, we calculate the average responsible investing score for all rated funds (the world average) and track progress over the last five years to determine trends. We find that since the RAAI launched in 2016, global asset owners have been upping their game on ESG, with the average World RAAI score reaching 52 percent in 2021, up from 48 percent in 2019 and 44 percent in 2017. In other words, responsible investing by world asset owners has been advancing steadily across the globe, but progress is coming from a low base, and many institutions remain below potential.

To put this in perspective, if the world were an asset allocator, it would have the same average score today as the Nigeria Sovereign Investment Authority, placing 121 out of 251 all rated funds. If it were a region, the world would have the same score as the average asset allocator in South East Asia.

The improving score trend over time for world asset allocators is good news, but the level remains disappointingly low. For example, comparing the world average score of 52 percent with the average score for the top quintile performers (top 50 in the RAAI Index) of 96 percent, it is clear that the 200 asset allocators in the lower quintiles have a long way to go.

World asset allocators improved in six responsible investing principles in 2021 versus 2019, including intention (for example, issuing a statement on responsible investing policy, publishing a downloadable report on responsible investing practices), integration (integrating ESG throughout the portfolio), commitment (hiring dedicated staff, socializing responsible investing principles), accountability (monitoring and reporting performance in hitting ESG targets), standards (adopting uniform external ESG reporting standards), and development (reflecting the SDG, investing responsibly in smaller emerging markets). Scores for disclosure (publishing a detailed annual report or website) have been maintained at high levels for years, with average scores of 96-100 percent, and there is little scope for improvement.

In contrast, average scores declined in 2021 versus 2019 for three principles including clarity (publishing measurable goals for responsible investing across asset classes), implementation (providing examples of responsible investments for stakeholders across the portfolio), and partnerships (taking a leadership role in partnership organizations and collaborating with others). This decline in scores can be attributed to the introduction of the tough new criteria noted for each of these principles.

Looking more closely at individual criteria, we find that global asset allocators outperform in several areas relative to the total world average score. For example, over 60 percent of all rated asset allocators now issue a statement on their responsible investing policies, explain and describe strategies they use for responsible investing (such as active voting, engagement, and ESG integration), invest responsibly and sustainably in frontier markets, and provide examples of responsible investments for their stakeholders.

At the same time, we see that low scores in select criteria are dragging down world average RAAI scores and need attention. For example, only 33 percent of world asset allocators issue a stand-alone, downloadable report (or major section in the annual report) on their responsible investing practices, or provide examples of responsible investing across asset classes in the portfolio. Only 30 percent have goals and targets for all environmental (E), social (S), and governance (G) investing categories, including climate change, diversity and inclusion, and responsible supply chains. Finally, less than 30 percent make any reference to the SDGs.

2. The Largest Allocators are Driving Progress on Responsible Investing

In contrast to the gradual improvement shown in world average RAAI scores, the 25 largest asset allocators (top 10 percent by AUM) have shown remarkable progress, recording an average RAAI score of 69 percent in 2021 versus 59 percent in 2019 and 56 percent in 2017. The rapid advancement in responsible investing by this cohort, comprising $13.8 trillion in AUM, is significant as they have enormous influence in global capital markets and can drive hundreds of billions of dollars into solutions for some of the world’s biggest challenges such as reducing carbon and greenhouse gas emissions, building renewable energy and clean water resources, and improving access to education and healthcare in the developing world.

3. Europe, particularly Denmark, the U.K., and the Netherlands, lead the way with Australia/New Zealand and Canada not far behind

The RAAI divides rated asset allocators into four geographic regions: Europe (including Scandinavia, the U.K., Western Europe, and Global Institutions), Asia (including Australasia, Central Asia, East Asia, South Asia, and South East Asia) Americas (including Canada, Latin America, and the United States) and EEMEA (including Eastern Europe, Middle East, and Africa).

The RAAI rated 62 asset owners in Europe, and it is by far the best performing region, with an average aggregate RAAI score of 78 percent. This compares with second place Asia (52 asset owners rated), with an average score of 57 percent, and a virtual tie for last place between the Americas (104 asset owners rated) and EEMEA (33 asset owners rated), with scores of 39 percent each.

Within Europe, Denmark is the standout, with an average RAAI score of 94.8 percent, the highest aggregate score for any sub-region or country where five or more asset allocators are rated. The U.K. and the Netherlands are second and third, with scores of 82.5 percent and 80.0 percent, respectively.

Asia’s scores are boosted by Australasia, where 19 asset allocators are rated, receiving an aggregate average score of 78.6 percent. On the other hand, Asia is weighed down by low responsible investing practices in South Asia (RAAI score of 27 percent) and China (RAAI score of 25 percent) in particular.

The Americas region is lifted by Canada, where 13 asset allocators are rated, and show an average score of 81.8 percent. However, the region is hurt by poor performance among Latin American and U.S. asset owners, recording lowly aggregate RAAI scores of 20 percent and 34 percent, respectively.

The average RAAI score for regions and countries in developing economies is generally below the total world average. For example, the average RAAI score for Latin America is 20 percent and for MENA countries (Middle Eastern and Northern African nations) the score is 33 percent. As asset allocators in these parts of the world continue to develop and diversify their approach to managing national savings, there is ample scope to introduce more sophisticated responsible investing programs. In particular, with $3.8 trillion in AUM, MENA asset allocators could make an enormous difference in advancing environmental and social goals, benefitting the people of their states as well as global citizens.

4. The Leaders and Finalists continue to set the bar for responsible investing, widening the gap with the rest of the world.

With an average score of 96 percent, the leaders and finalists (the top quintile), are far ahead of the average score for the rest of the world, asset allocators that rank in quintiles 2-5. Further information on this performance gap, and on areas of responsible investing that need further attention, can be found in Chapter III of this report,The RAAI Index and Leaders List, under the section Performance Analysis of the Leaders and Finalists. One of the main objectives of the RAAI Index and the Leaders List is to establish a benchmark of excellence that peers can use as a guide to lift responsible investing performance. Asset allocators earning scores that rank them in the top quintile are deservedly the most responsible investors in the world, and they help to create a “race to the top” for the broader investment community.

5. The world’s two biggest economies, the United States and China—comprising 40 percent of global GDP—are lagging dangerously behind the rest of the world on responsible investing

The poor performance of U.S. asset owners on responsible investing is particularly concerning. With an average total score of just 34 percent, the United States ranks lowest among developed Western economies and is low even by developing economy standards. For example, the United States ranks below Africa (48 percent) and Southeast Asia (52 percent). The RAAI analyzed 82 U.S. asset allocators with AUM of $5.8 trillion (22 percent of total rated fund’s AUM), and while collectively these investors have the potential to advance critical solutions for challenges such as climate change, less than ten are trying to make a difference.

Eight out of 82 U.S. asset allocators rated by the RAAI (10 percent) are global leaders on responsible investing, versus 10 out of 22 (45 percent) in the U.K., six out of 13 (46 percent) in Canada, nine out of 19 (47 percent) in Australia/New Zealand, and six out of 12 (50 percent) for Scandinavia. Nearly two-thirds of U.S. asset allocators rank in the bottom two quintiles of the RAAI Index.

China ranks even lower than the United States on responsible investing, with an average total RAAI score of just 25 percent, placing it in the fourth quintile just ahead of Latin America. With 1.4 billion people, China accounts for 18 percent of the global population and with a GDP of $15 trillion, it also accounts for 18 percent of the world economy. It’s influence on global economic and energy trends is enormous. The government in China has pledged to go carbon neutral, and the country does have the largest installed capacity of renewable energy in the world, accounting for 26 percent of domestic energy consumption. However, the transition to a carbon neutral economy is complicated by the fact that the rest of China’s energy needs are met mostly through coal-fired power plants. In fact, in 2020, China added 38.4 gigawatts of coal-fired power to its capacity, more than three times the amount added by the rest of the world combined, and plans remain in place to continue adding capacity going forward.

On a global scale, without leadership from the United States and China, the world’s two biggest economies, together accounting for 40 percent of global GDP, it will be difficult to overcome the biggest ESG challenges facing our planet today.

VI. What’s New? Comparing the 2021 and 2019 RAAI Leaders List

When comparing the 2021 and 2019 Leaders Lists, three major differences stand out:

It was harder to make the Leaders List in 2021 than it was in 2019 and 2017, because of increased competition and a higher bar for inclusion. In 2021, 251 asset allocators were rated compared to 197 in 2019 and 121 in 2017. Additionally, in 2021, asset allocators were rated on 30 criteria, 10 more than in 2019 and 18 more than in 2017. A higher score was also needed to qualify. Leaders in 2021 needed to score at least a 96 to make the cut, versus a minimum of 94 in 2019 and 90 in 2017.

 The total AUM in 2021 is nearly $2 trillion higher at $7.91 trillion than it was in 2019 ($5.94 trillion). This indicates that larger, more mature asset allocators are increasingly focused on responsible investing and hence more assets are being deployed toward social and environmental goals alongside financial returns. Part of the jump in assets was due to the inclusion of five additional funds on the Leaders List. However, even excluding the AUM of the largest asset allocators (Japan’s $1.4 trillion GPIF [Government Pension Investment Fund] and Norway’s $1.4 trillion GPF), the next 28 leaders together accounted for $5.2 trillion of AUM, versus $4.5 trillion for the equivalent group of leaders in 2019.

The Leaders List is dynamic, with room for improvement from previously rated funds and the opportunity for newly rated funds to be recognized for their leadership on responsible investing. Eleven new asset allocators were selected for the Leaders List in 2021—one (Spain’s COFIDES) was new to the RAAI and not covered in 2019. Of the remaining ten new leaders, all were able to raise their scores in 2021, including: Australian firms Aware Super and UniSuper, Ireland Strategic Investment Fund, ATP Group of Denmark, CDP Group of Italy, New York State Common Retirement Fund of the USA, and U.K. firms USS, LGPS Central Limited, Brunel Pension Partnership, and London CIV.

VII. Methodology

Constructing and Refining the Universe of Funds

To construct the universe of funds for the 2021 study, researchers utilized updated lists of SWFs and GPFs from the 2019 study, as compiled by the International Forum, the Organization for Economic Co-operation and Development (OECD), the Pacific Pension & Investment Institute (PPI), Professor Paul Rose at the Ohio State University Moritz College of Law, Official Monetary Financial Institutions Forum (OMFIF), Northern Trust, Willis Towers Watson, and the Sovereign Investor Institute’s Sovereign Wealth Center.

This resulted in a comprehensive list of 1630 asset allocators (compared to 624 in 2019 and 298 in 2017) to be reviewed by RAAI researchers. The comprehensive list was then cleaned of all duplicates and sub-managed accounts, eliminating 996 funds and resulting in a universe of 634 asset allocators to be analyzed, with the total AUM of $37 trillion.

Researchers then went through a series of steps to arrive at the final list of funds to be rated. First, all asset allocators other than SWFs and GPFs, the focus of the RAAI, were eliminated from the universe (including private and corporate pension funds, endowments, foundations, philanthropic organizations, family offices, insurance firms, and asset managers).

Second, to ensure the SWFs and GPFs were sufficiently large and had adequate data for rating consideration, researchers eliminated funds with less than $2 billion of AUM. In addition, asset allocators were eliminated from the ratings if they could not be evaluated due to:

  • Highly constrained portfolios (for example, investing only in treasuries);
  • Recent establishment leading to insufficient data;
  • Lack of funding; or
  • Insufficient information available in English.

This eliminated 375 funds with AUM of $11 trillion.

Finally, funds were eliminated from ratings coverage if:

  • AUM had been substantially depleted or removed by stakeholders;
  • The fund had been dissolved;
  • The fund was embroiled in legal action due to fraud or scandal;
  • AUM had been frozen; or
  • The fund’s mission and/or remit had been substantially changed, leading to a reassessment of investing goals and processes.

This last step eliminated eight funds, leading to the final list of 251 asset allocators that were rated, comprising AUM of $26 trillion. The top 30 scoring asset allocators, with AUM of $7.8 trillion, were selected for The RAAI Leaders List: The 30 Most Responsible Asset Allocators in the world, with the next highest scoring 22 funds selected as finalists to complete the top quintile.

Rating Framework

Each of the 251 asset allocators in the final list were rated across 30 criteria, three for each of the 10 core principles, up from 20 criteria in 2019 (see the Principles and Criteria section for more). Reviewers analyzed information from the public domain to rate each fund, including annual reports, company websites, other published reports, articles, and additional materials available publicly. Rated funds received either full or zero points for each criteria; no partial points were assigned. Each fund was analyzed by several independent reviewers, and then ratings were double-checked by an expert.

Once scores were aggregated, asset allocators were rank-ordered and divided into quintiles such that quintile cut-off scores ensured a similar number of asset allocators in each quintile (about 50 asset allocators per quintile in 2021 compared to 40 per quintile in 2019 and 25 in 2017). Quintile 1 comprises the highest-rated asset allocators, while Quintile 5 comprises asset allocators that received the lowest ratings.

In the 2021 RAAI Index, the top 30 asset allocators in Quintile 1 made the Leaders List, and the next highest 22 in Quintile 1 were selected as finalists. In 2019, the top scoring 25 asset allocators in Quintile 1 made the Leaders List, while the next 15 from Quintile 1 and 10 from Quintile 2 were selected as finalists. In 2017, there were a total of 121 rated asset allocators, and all 25 of the top scoring funds in Quintile 1 were selected as leaders (there were no finalists).

The RAAI Index provides the first comprehensive analysis of the responsible investment practices of the world’s largest SWFs and GPFs, but there are limitations to this study. The criteria, while expanded and customized for asset allocators, are by no means an exhaustive list of responsible investing characteristics. Some important metrics may be overlooked. Second, only SWFs and GPFs that disclose information in English are rated. Thus, it is possible that a SWFs and GPFs with good, responsible investing practices, but limited English disclosures, could be overlooked by this study. In addition, awarding full or zero points for each criteria leaves little scope for nuanced analysis and ratings. Finally, since the index only covers SWFs and GPFs, there are many worthy asset allocators that are not included in the study.

Let me thank Neil Hrab of OMERS for sending me this research.

Please take the time to scroll all the charts here as I only focused on the passages above. 

I find this research fascinating because it uses a rigorous methodology and the findings are fair and balanced.

A few things strike me:

  • With an average score of 96 percent, the leaders and finalists (the top quintile), are far ahead of the average score for the rest of the world, asset allocators that rank in quintiles 2-5. 
  • Europe is way ahead of the rest of the world with Denmark beings the standout, with an average RAAI score of 94.8 percent, the highest aggregate score for any sub-region or country where five or more asset allocators are rated.
  • The Americas region is lifted by Canada, where 13 asset allocators are rated, and show an average score of 81.8 percent. 
  • Eight out of 82 US asset allocators rated by the RAAI (10 percent) are global leaders on responsible investing, versus 10 out of 22 (45 percent) in the U.K., six out of 13 (46 percent) in Canada, nine out of 19 (47 percent) in Australia/New Zealand, and six out of 12 (50 percent) for Scandinavia. Nearly two-thirds of U.S. asset allocators rank in the bottom two quintiles of the RAAI Index.

Among Canada's large pensions that made the leaders in the top 30 list this year you will find:

  • AIMCo (leader)
  • BCI (leader)
  • CDPQ (leader) 
They all received a perfect score which is very impressive (a bit unclear because CDPQ received a toal score of 98 when you download data in Excel of  the 2021 RAAI but that's probably a mistake). 

I guess AIMCo surprised me because I have not covered their responsible investing as closely as that of CDPQ and BCI which I've covered on my blog.

Looking at the data, I saw PSP Investments, OMERS and OTPP were all finalists with a total score of 93, and CPP Investments (90), HOOPP (91) and OPTrust (89) also scored highly even if they weren't finalists. IMCO came in at 95th position with a total score of 78. 

It doesn't surprise me at all that all of Canada's large pensions ranked high, maybe not all perfect, but very high.

They all take responsible investing very seriously and some of them (BCI, CDPQ, OTPP, OMERS, IMCO) have set targets to become net zero by 2050 or before.

Look, I am going to be honest, they all impress me but CDPQ is the one I see really taking the lead on responsible investing in Canada with OTPP, OMERS, BCI, PSP all close behind and CPP Investments is also impressive even if it wasn't a finalist.

But again, I know little to nothing about AIMCo's responsible investing which impressed the people making this list as I don't know much about HOOPP's responsible investing approach which scored high on the list. 

OPTrust I do know about and they are impressive, so it doesn't surprise me they made the list and scored relatively high.

Is there room for improvement? You bet, this research even states it flat out:

Note, leaders and finalists also have room for improvement, scoring well below their total average score of 96 percent on select criteria. For example:

  • Under development, leaders and finalists show below-average scores. Only 90 percent of leaders and finalists reference the SDGs, only 85 percent show leadership on innovation in ESG, and just 78 percent invest in frontier markets and follow responsible investing practices while doing so. Accordingly, the average score for development at 86 percent, is the lowest among all principles for leaders and finalists.
  • In terms of accountability, 100 percent of Leaders and Finalists report progress toward meeting ESG targets, but only 86 percent report on the financial performance of their ESG investments.
  • Regarding implementation, 100 percent of leaders and finalists provide examples of ESG investments for their stakeholders in select categories, but just 90 percent are able to provide examples of responsible investments for all three ESG categories, and only 88 percent provide a benchmark for measuring the ESG performance of their responsible investments.
Anyway, there's a lot covered here so please take the time to digest it carefully.

We have a lot to be proud of in Canada in terms of responsible investing and as this research notes, leaders and finalists matter a lot, they set the global bar and others follow.
 
Of course, it is concerning to read this:
On a global scale, without leadership from the United States and China, the world’s two biggest economies, together accounting for 40 percent of global GDP, it will be difficult to overcome the biggest ESG challenges facing our planet today.
We need to get the US and China involved in a very serious way when it comes to responsible investing. Without them, it's impossible to overcome the biggest ESG challenges facing our planet today.
 
Alright, let me wrap it up there.
 
Oh, by the way, featured in the picture at the top are 2021 Leaders List Award Winners (left to right) Michael Marshall, RPMI Railpen, Scott Klab (RAAI) and Rebecca Manuel, CDPQ.
 
Below,  last month, finance leaders delivered speeches at climate change summit (COP26).  
 
And Mark Carney, former Bank of England Governor, discused support for climate change within the global financial system and the work of the Glasgow Financial Alliance for Net Zero. He spoke with Francine Lacqua on the sidelines of the COP26 Summit in Glasgow, Scotland on “Bloomberg Surveillance.”
 
Update: After reading this comment, Mark Prefontaine, the former Chief Client & Stakeholder Relations Officer at AIMCo shared this on a comment on Linkedin:

Great post, Leo. Canada enjoys some of the world's most responsible investment management and financial institutions.

I would encourage you to look more deeply at the great work that Alberta Investment Management Corporation (AIMCo) is doing on behalf of its clients with its Responsible Investment program. I am not surprised to see them on this list.

Led by Amit Prakash and Alison Schneider, the RI Team is doing tremendous work to integrate ESG considerations across all asset classes. You can learn more in their RI Annual Report here: https://www.aimco.ca/what-we-do/responsible-investing/highlights

I thank Mark for sharing this and look forward to learning more from Amit Prakash and Alison Schneider on the work they are doing to integrate ESG across all of AIMCO's asset classes.

Update #2: Dénes Nemeth, Vice President Corporate Communications & Public Affairs, got back to me stating this:

Thank you again for posting on this topic. The acknowledgement from RAAI speaks volumes to the excellent work that AIMCo and Canada’s most responsible asset allocators are doing every day to serve the needs of our clients. We must find a time for you to learn more about AIMCo’s Responsible Investment practices, but in the meantime, I would share the attached from Alison Schneider, Vice President, Responsible Investment at AIMCo:

Thank you for your interest in learning more about AIMCo’s Responsible Investment (RI) program. We were certainly humbled and gratified to be acknowledged as an RAAI leader for the third year in a row! You may find it noteworthy to know that AIMCo’s RI journey began in 2010, when we became a signatory to the UN-backed Principles for Responsible Investment (PRI) – and our approach to RI was influenced by the PRI’s framework. I’ve copy-pasted a timeline for your convenience which details several highlights of our RI journey over the past decade:


By viewing AIMCo’s assets through an ESG lens, we believe we can add value and ensure we are protecting our clients’ interests over the long term. Our three responsible investment strategic priorities are:

  1. Integrating ESG into the investment process
  2. Advancing stewardship & advocacy
  3. Navigating the transition to low-carbon economy

I’d be happy to connect with you to share more details on our RI program at AIMCo, such as how we align ESG strategies across asset classes, our work in collaborative RI focused initiatives such as GRESB and our progress in addressing climate risk and the Task Force for Climate-related Financial Disclosures recommendations.

Our latest RI Report, TCFD Report, and our RI related policies, guidelines and further details on our RI work are available on our website at: https://www.aimco.ca/what-we-do/responsible-investing. If you have any questions or we can provide additional information, please let us know.

I thank Dénes for getting back to me and look forward to covering how AIMCo aligns ESG strategies across asset classes with Alison in the near future. Well done, congratulations!

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