Second Annual Sovereign Wealth Fund Conference

From “Savings Glut” to Sustainable Growth

October 17-18, 2011 • 6-8PM

ESCP Europe, Paris, France

  • Amar Bhattacharya, Director Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development
  • Al Gore, Chairman of the Board, Generation Investment Management
  • Nathalie Kosciusko-Morizet, Minister Ministry of Ecology, Sustainable Development, Transport and Housing of France
  • Carlos Obeid, Chief Financial Officer, Mubadala Development Corporation
  • Jin Liqun, Chairman, China Investment Corporation
  • Augustin de Romanet, Chairman and Chief Executive Officer, Caisse des Depots et Consignations (France)
  • Christian Noyer, Governor, Bank of France
  • Saskia Sassen, Robert S. Lynd Professor of Sociology, Columbia University
  • Lord Nicholas Stern, I.G. Professor and Chair of the Grantham Research Institute on Climate Change and the Environment, London School of Economics
  • Joseph E. Stiglitz, University Professor, Columbia University

“From ‘Savings Glut’ to Sustainable Growth” brought together investors from sovereign wealth, pension and other long-term funds with policymakers, academics and leading economic thinkers for an intensive two-day program of plenary sessions, smaller working groups and keynote addresses. The discussion focused on how SWFs and similar funds can transform savings into a force for global financial, geopolitical and environmental stability, without sacrificing profit. SWFs and other long-term investors have tremendous opportunity to play an increasingly productive role on the international stage; this conference series explores the avenues and obstacles to doing so.

Part of the Sustainable Investment CGT Signature Research Project.

Panels

Plenary Session: Global Imbalances: Savings, Consumption, Investment

  • Amar Bhattacharya, Director Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development
  • Lord Nicholas Stern, I.G. Professor and Chair of the Grantham Research Institute on Climate Change and the Environment, London School of Economics
  • Joseph E. Stiglitz, University Professor, Columbia University

What role did global imbalances play in the causes of the financial crisis? Some argue that a "global savings glut" resulting from developing country exchange rate intervention to self-insure and to promote export-led growth resulted in easier borrowing conditions in developed countries. Others blame the easy monetary policies pursued by developed countries and the Federal Reserve in the US in particular. A major component of the response to the financial crisis has been aggressively loose monetary policy in developed countries, which has been perceived by some as inflating asset bubbles in commodities and emerging markets; and controversies over exchange rates, the management of foreign reserves, and the shape of financial globalization have all reasserted themselves.

Read the summary: Global Imbalances: Savings, Consumption, Investment


Plenary Session: Objectives, Liabilities and Externalities

  • Augustin de Romanet, Chairman and Chief Executive Officer, Caisse des Depots et Consignations (France)
  • Jin Liqun, Chairman, China Investment Corporation
  • Carlos Obeid, Chief Financial Officer, Mubadala Development Corporation

Governments create sovereign wealth funds to achieve various objectives that include earning profit for the sovereign, preserving wealth for future generations, protecting the economy against shocks, providing public goods, and facilitating domestic development, among others. At this panel, representatives of select funds will discuss the formulation of their funds' objectives, and the roles that risk management, transparency and public opinion, and positive and negative externalities have on their investment strategies.

Read the summary: Objectives, Liabilities and Externalities


Obstacles to the Global Deployment of Investment

  • Kathryn Gordon, Acting Head, OECD Investment Division
  • Franco Bassanini, President, Cassa Depositi e Prestiti
  • Peter Bekx, Director of International Economic and Financial Affairs, European Commission's Directorate General for Econommic and Financial Affairs
  • Mark Sobel, Deputy Assistant Secretary, International Monetary and Financial Policy, U.S. Department of Treasury
  • Edouard Vieillefond, Managing Director, Regularory Policy and International Affairs Division, Autorité des Marchés Financiers

Overseas investment, with substantially increased risk and uncertainty of future profit, are challenging for any investor. SWFs often face more obstacles when investing abroad than private investors do. Concerns over lack of transparency of investment objectives, ties with the sovereign government and the volume of funds available for a single deal have given rise to knee-jerk protectionism and public outcry, intensifying legal and cultural obstacles. Initiatives promoting transparency, clearer governance arrangements, and voluntary guidelines have been developed to alleviate the problem. This panel will investigate the most challenging impediments to global investment by SWFs and propose solutions.

Read the summary: Obstacles to the Global Deployment of Investment


Green Investments: Ratings, Indices and Agencies

  • Augustin Landier, Professor of Finance, Toulouse School of Economics
  • Mats Andersson, Chief Executive Officer, Fjarde AP-Fonden (Sweden)
  • Pascal Blanque, Chief Investment Officer, Deputy Chief Executive Officer and Head of Institutional Investment, Amundi Asset Management
  • Paul Dickinson, Chief Executive Officer, Carbon Disclosure Project
  • Harrison Hong, University Professor, Princeton University

As sustainable investments are transitioning towards the mainstream, a greater need for data exists along pertinent environmental, social, and governance (ESG) dimensions. This panel of policy makers, investment and fund officers, and academic specialists will discuss the emerging business of green information development - green rating agencies, and the aggregate measure - green indices. The expansion of green rating business and indices present immense investment opportunities for socially responsible investors, particularly large institutional investors like sovereign wealth funds.

Read the summary: Green Investments Ratings, Indices and Agencies


Africa: Opportunities and Challenges of Transition

  • Elyes Jouini, Vice President, Universite Paris-Dauphine
  • Erik Berglof, Chief Economist, European Bank for Reconstruction and Development
  • Adan Daud Mohamed, Chairman, National Social Security Fund (Kenya)
  • Mthuli Ncube, Chief Economist, African Development Bank
  • Katharina Pistor, Michael I. Sovern Professor of Law, Columbia University
  • Juan Yermo, Head, Private Pension Unit, OECD Financial Affairs Division

Recent African economic growth is good, and its potential is better. This panel will address broad economic trends in the continent for development and investment, and challenges and opportunities in agriculture, energy, and infrastructure. A number of African countries are beginning to employ sovereign wealth fund vehicles as part of a set of mechanisms to create stable and attractive fiscal and monetary policy environments. The panel will address opportunities for sovereign funds, including the potential for collaboration and impact in view of transitional governance and high unemployment. Furthermore, the panelists will consider complementary measures, which countries and microfinance institutions might adapt to mobilize funds for development. The top policy officials from banking and government in Africa will join academics for this dynamic discussion.

Read the summary: Africa Opportunities and Challenges of Transition


Long-Term Investment Premium

  • Patrick Bolton, Barbara and David Zalaznick Professor of Finance and Economics, Columbia University
  • Jean-Yves Gilet, Chief Executive Officer, Fonds Strategique d'Investissement
  • Frederic Samama, Head of the Steering Committee, Sovereign Wealth Fund Research Initiative
  • Paul Woolley, Senior Fellow, London School of Economics

It is widely assumed that SWFs have the capacity and imperative to focus on long-term investments. Based on their willingness to take greater investment risks with higher rates of return than traditional state agencies tasked with managing foreign exchange reserves, SWFs are seen as possessing lengthened time horizons, yet, SWFs often engage in short-term investments. The importance of long-term investors is widely acknowledged, yet incentives to promoting commitment to lengthy investment time frames are scarce. This panel will seek to identify strategies that SWFs can use to achieve long-term objectives.

Read the summary: Long-Term Investment Premium


How (Much) Should Carbon be Priced?

  • Christian Gollier, Director, Toulouse School of Economics
  • Pierre Ducret, President, Climat, Caisse des Depots et Consignations (France)
  • Roger Guesnerie, Professor of Economics, Collège de France
  • Bob Litterman, Co-developer, Black-Litterman Global Asset Allocation Model

Bridging scientific forecasts and policy decisions that measure climate change, this panel examines the economics that play a key role in pricing carbon emissions. Getting that price right is a political conundrum with grave consequences. Standard present value analysis of future damages resulting from the earth’s warming trend usually ignores catastrophic risks. The practical initiatives of carbon pricing have been developing and this panel of financial and academic experts will debate the proper valuation, which will present opportunities for long-term investors.

Read the summary: How (Much) Should Carbon be Priced?


Long-Term Sustainable Investment Strategies

  • Aaron Chatterji, Associate Professor, Fuqua School of Business, Duke University
  • Haizhou Huang, Chief Strategist, China International Capital Corporation
  • Aidan Karibjanov, Deputy Chairman of the Board
  • Luiz Eduardo Melin, Executive Director, Legal and Foreign Trade Division, Banco National de Desenvolvimento Economico e Social (BNDES)
  • Jean Tirole, Scientific Director, Institut d'Economie Industrielle

Investment approaches that incorporate long-term environmental, social and governance concerns have been rapidly growing despite the recent economic downturn. Considering their broader investment mandates, SWFs are a natural clientele for such investments, but must develop proper strategies to link sustainability and profit. This panel will examine approaches and challenges to implementing sustainable strategies specific to long-term public investors, including a discussion of the northern European perspective and an exploration of new investment strategies used the Mubadala Development Company at Masdar.

Read the summary: Long-Term Sustainable Investment Strategies


Risk Factors/Risk Management

  • Heung-Sik Choo, Director, Reserve Management Strategy Division, Bank of Korea
  • Elroy Dimson, Emeritus Professor of Finance, London Business School
  • Alexander Dyck, Associate Professor, Rotman School of Management, University of Toronto
  • Philippe Ithurbide, Global Research Head, Strategy and Analysis, Amundi Asset Management
  • Dimitri Vayanos, Professor of Finance, London School of Economics

Sovereign wealth funds are subject to the same risks, both internal and external, and the exposure to shocks that affect the global economy. Panelists will evaluate and analyze methods to measure global economic uncertainties and imbalances such as debt burdens, inflation and deflation, currency valuations, monetary policy, capital flows, volatility, and reserves. Financial tools will also be considered for optimal allocation plans while reducing risk. Panelists include professors of finance and economics and financial industry experts.

Read the summary: Risk Factors/Risk Management


Sustainable Infrastructure and Green Cities

  • Hamid Tawfiki, Chief Executive Officer, CDG Capital
  • Shalini Vajjhala, Deputy Assistant Administrator, Office of International & Tribal Affairs, Environmental Protection Agency (U.S.)
  • David Wood, Director, Initiative for Responsible Investment at the Hauser Center for Nonprofit Organizations, Kennedy School of Government, Harvard University
  • Ken Yeang, Architect, Llewelyn Davies Yeang

As much as three quarters of global energy production is consumed in cities, and the number will only increase as urbanization progresses in Africa and Asia. Investing in the construction and renovation of green cities has emerged as a key component of combating climate change. While the effort to secure agreement on climate change mitigation at the nation-state level has faltered, the issue of urban spaces has catalyzed renewed emphasis on multilateral co-ordination at the city-level. Extensive public-private investor coordination is required to retrofit cities to address carbon output, water recycling, cleantech, integrated waste management and energy efficiency. This panel pairs prominent green architects with prominent experts in global finance and impact investing.

Read the summary: Sustainable Infrastructure and Green Cities


Global Food Security

  • Victoria Barbary, Office of the Chairman, Monitor Group
  • Pierre Jacquet, Chief Economist, Agence Francaise de Developpement
  • Vipul Prakash, Senior Manager, Agribusiness and Forestry, IFC (World Bank)
  • Wolfram Schlenker, Assistant Professor of Economics, Columbia University

Food security has become extremely visible since the 2007/2008 global commodity price rise, which placed many of the world's poorest at risk. With the twin pressures of supply interruptions from changing climate patterns and increasing demand from emerging markets growing rapidly in population and incomes, agricultural food production is strained. This panel of interdisciplinary scholars, policy makers and practitioners will broadly address the implications of climate and demographic changes, innovations in technologies and investments, and ask how best to mitigate the risks of food price volatility. In particular, we consider the opportunities that might be appropriate from a long-term sustainable perspective.

Read the summary: Global Food Security

Participating Organizations

  • Arab Authority for Agricultural Investment and Development
  • APG (Netherlands)
  • Bank of Greece
  • Bank of Korea
  • Bank of Mauritius
  • Bank of Thailand
  • Banque de France
  • Caisse des Depots et Consignations (France)
  • Caisse de Dépôt et Placement du Québec
  • Cassa Depositi e Prestiti (Italy)
  • Central Bank of Brazil
  • China Investment Corporation
  • Credit Agricole Assurances
  • Czech National Bank
  • Forsta AP-Fonden (Sweden)
  • Fjarde AP-Fonden (Sweden)
  • Fonds de Reserve pour les Retraites
  • Fonds Strategique d’Investissement
  • Government of Singapore Investment Corporation
  • Government Pension Investment Fund (Japan)
  • Hellenic Financial Stability Fund (Greece)
  • IFC (World Bank)
  • Korea Investment Corporation
  • Kuwait Investment Authority
  • Mubadala Development Company (Abu Dhabi)
  • Mumtalakat (Bahrain)
  • National Social Security Fund (Kenya)
  • National Welfare Fund Samruk-Kazyna
  • Ontario Municipal Employees Retirement System
  • Qatar Holding
  • Queensland Investment Corporation (Australia)
  • Saudi Arabian Monetary Authority
  • State Oil Fund of the Republic of Azerbaijan
  • TIAA-CREF (USA)

Sponsoring Organizations

Sovereign Wealth Fund Research Initiative

The Sovereign Wealth Fund Research Initiative (SWF RI) was established in 2009, bridging the gap between academics, policy makers and fund managers to identify new and innovative solutions for sustainable capitalism. The SWF RI is an independent organization and is partly sponsored by Amundi Asset Management, a subsidiary of the Credit Agricole Group. CGT and SWF RI collaborate on programming related to sovereign wealth funds.

Amundi Asset Management

Amundi was formed by combining the asset management expertise of two major banking groups: Crédit Agricole and Société Générale. This partnership reflects the two groups' shared vision of asset management responding to the new challenges facing the industry and allowing them to serve their clients more effectively.

With €675.5 billion in assets under management, Amundi is one of the world market leaders in asset management. Amundi has management teams operating in the major financial centers in Europe (Paris, London, Milan), in Asia (Japan, Hong-Kong, Singapore), Australia and the US. Amundi has a strong local presence and is committed to offering its clients a relationship defined by both proximity and a long term view. It actively manages all asset classes and main currencies (Euro, Yen, Dollar, Sterling).

Amundi pledges to respect the Principles for Responsible Investment (PRI). As one of the market leaders in asset management, Amundi Group has to be both exemplary and has to assume significant responsibilities in terms of transparency and conducting its activities with a long-term view.

Caisse des Depots et Consignations (France)

The Caisse des Dépôts group is a "public group serving general interest and economic development". Created in 1816 to restore confidence following the financial crisis after the Napoleonic wars, its first task is to "receive, conserve and return the values entrusted to it". From there onwards, its missions have kept growing to correspond to the country's pressing issues.

Credit Agricole CIB

Crédit Agricole CIB is the Corporate and Investment Banking arm of the Crédit Agricole Group, the world's thirteen largest, Europe's third-largest and France's first-largest bank on the basis of Tier 1 capital (The Banker - July 2010). The Group is present in 70 countries and has 162,000 employees worldwide.With around 13,000 employees in more than 50 countries, Crédit Agricole CIB offers its clients a comprehensive range of products and services in capital markets, brokerage, investment banking, structured finance, corporate banking and international private banking.