Integrating ESG Factors in Sovereign Wealth Fund Investments

As an investment director of a sovereign wealth fund (SWF) that focuses on sustainable investments, you are preparing a presentation for the fund’s board. The board seeks to understand how incorporating environmental, social, and governance (ESG) factors into the investment decision-making process can enhance both the financial performance and social responsibility of the SWF.

In your presentation, address the challenges of integrating ESG criteria into the investment process while maintaining risk-adjusted returns. Evaluate the potential benefits of active versus passive approaches in this context. Finally, discuss specific asset classes that are well-suited for sustainable investments, along with any relevant case studies that may illustrate successful outcomes.