SWFs Surveyed on Santiago Principles

Ashby Monk 

The International Forum of Sovereign Wealth Funds (IFSWF) has published a really interesting report entitled “IFSWF Members’ Experiences in the Application of the Santiago Principles”. It’s worth reading in its entirety, as it presents detailed results of an internal survey conducted by the IFSWF of its Members’ experiences with the Santiago Principles. Here’s a blurb to pique your interest:

“The survey…was originally undertaken as an internal exercise, with the aim of helping Members to learn from each other. However, the Beijing meeting of the IFSWF decided to publish the document in order to provide a deeper insight into the purposes, structures, investment strategies, and practices underpinning the activities of IFSWF Members and, importantly, to clarify  how and why those practices differ across the Membership…The result is an unprecedented consolidation of information about the legal and institutional frameworks of SWFs, their governance structure, their approach to investment and risk management, and their stance on transparency and disclosure.  Since the detailed information has been provided willingly by the Members, it is confirmation of their desire to share valuable experiences and to learn from each other.”

I have to agree with that statement. The information is detailed and, in some instances, new. There are direct quotes coming from the likes of ADIA, CIC, GIC, QIA and other SWFs about their operations. As you are no doubt aware, these funds aren’t known for being chatty. So I give full credit to the IFSWF for putting this document together and releasing it to the public. Impressive.

There is way too much information in this report to synthesize it here. But, the clear take-away for me is the sheer differentiation of SWFs from one another. SWFs are a truly heterogeneous bunch. And this heterogeneity makes implementing a singular set of practices across all the organizations quite difficult (if not impossible). It reinforces the fact that we (the SWF analysts) should have a bit more understanding, patience and flexibility for SWFs having different levels of “implementation”. These funds often have different structures, mandates and constraints, which means they will naturally interpret the voluntary code of principles and practices differently.

Now, I wouldn’t be doing my job if I didn’t offer some constructive criticism and pointed questions about the report. (And, by the way, I’d be grateful for readers to return the favor if my comments above or below seem misguided).

First, why are certain IFSWF Members NOT participating in this survey?

“Twenty-one IFSWF Members responded to the SP Survey…while 17 Members responded to the General Survey.”

Recall that the IFSWF has 26 Members. If IFSWF Members are unwilling to respond to an internal survey about their experiences implementing the Santiago Principles (which, we should remember, is the cornerstone initiative of the IFSWF), why are they in the IFSWF to begin with? I accept that certain funds (e.g., NPRF) have had unavoidable detours that prevent them from active participation at present. But, in my view, if a fund is unwilling to work with the IFSWF to further its agenda, then it should simply withdraw from the IFSWF. I say this because inactive IFSWF Members dilute the positive impact that the SPs could have for active Members. And it seems the IFSWF is starting to understand this, as it indicates (in a footnote) that it may actually do something about  these inactive Members:

“…IFSWF will review its membership and discuss with its inactive Members about their membership and endorsement of the Santiago Principles before the next meeting of the IFSWF in Mexico in May 2012.”

Again, I think that’s a positive development. The active Members want the SPs to be perceived as credible in the international community, and inactive Members detract from the SPs.

Second, I expect everyone reading this post would agree that IFSWF Members (i.e., those funds that have signed up to the Santiago Principles) should, at a minimum, understand how the Principles line up with their own operations. In other words, I’d expect all the Members of the IFSWF to have done some sort of an internal assessment — let’s call it a “gap analysis” —  that shows what the SPs call for and what the funds are doing. This seems (to me at least) a fundamental step a SWF would take as part of joining the IFSWF. Call it due diligence. So…I have to say it…I’m a bit surprised to see that some Members have not done a self-assessment and, more troubling, that some Members have no plans to do a self-assessment in the future (see chart below). Why not? And this then raises a question about the reliability of some of the survey results: If these funds haven’t done a self-assessment, what is the basis for their answers to the survey questions? In other words, how are we meant to reconcile the claim that “95%” of SWFs’ practices are SP-consistent with the fact that 8 of the funds (that participated in the survey) haven’t done internal assessments of SP implementation?

Critiques aside, I think this is a very worthwhile document. And the IFSWF deserves credit for being much more active since the Beijing meeting in terms of communications efforts. Keep it up!

3 Responses to “SWFs Surveyed on Santiago Principles”


  1. 1 Larry Catá Backer July 9, 2011 at 1:53 pm

    Great post Ashby. You ask thew right questions. The materials are rich and deserve careful consideration as much for what they mask as for what they reveal. Of significant importance in that ragard is the reliance on formalist analysis to stress conformity to the SP, and analysis that may well mask functional contradictions. Particularly interesting is the importance of formalism in the analysis of the report (The Institutional Framework and Governance Structure section is a good case in point).

  2. 2 Sven Behrendt July 13, 2011 at 1:20 am

    This document is, whether one agrees with its conclusions or not, the most meaningful contribution by the IFSWF to the SWF debate in the past two years.

    Just a few quick observations; the first rephrasing your point, Ashby: of the 624 possible datapoints (26 SWFs per 24 Principles, leaving aside Sub-Sprinciples) that can be used to assess consistency with the Santiago Principles, 404 responses of the survey indicate partial or full consistency. That is roughly 65%, and not that far off from the compliance ratios that Edwin Truman or myself have identified in our independent assessments.

    Perhaps a second point, again confirming yours, Ashby: The foreword states that “IFSWF Members, and SWFs generally, have typically been perceived as homogenous.” That is true. But I like to submit that the work of the IMF, the Monitor Group, some serious media outlets, parts of the academic community, and not least this very blog, including its numerous contributors, have done more to develop a more nuanced public perspective of SWFs than the IFSWF has in the past two years. One would hope that any future IFSWF Secretariat, whenever it is going to be established, would help the Forum to catch up with that debate.

    A final observation on the foreword: “What constitutes appropriate practice, and appropriate transparency of those practices, has been subject to the same perception of homogeneity.” I think it is important to distinguish between analytical perspectives and normative statements. The Santiago Principles represent such a normative statement, underpinning political objectives (free access to markets in recipient economies). SWFs themselves have chosen to publish a benchmark, which its signatories have pledged to meet – regardless of their ultimate function (long-term savings, stabilization, development, pension reserve, etc.). As far as I can see, the Principles are generic enough to allow SWFs, which have been set up under very different circumstances and with different objectives, to comply with them one way or another. My assumption is that the Principles represent the lowest common denominator that works across all signatories. If they not, why sign them?

    • 3 Ashby Monk July 13, 2011 at 11:09 am

      Great comment, Sven. Thanks for chiming in. No doubt you deserve some credit for the existence of this document. Seriously.


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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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