July 30, 2008

Wanted: More Disclosure and Transparency from Sovereign Wealth Funds

Over the past six months or so, sovereign wealth funds have increasingly been the subject of debate – in the media and in Congress – for taking stakes in distressed companies in the US and Europe. This debate has taken on many forms (eg. Boeing’s loss of a $40 billion contract to a joint venture that includes AirBus) and arguments (eg. Warren Buffett’s take from his annual letter).

As noted by RiskMetrics a while back, European Union regulators proposed guidance to member states to align policies on sovereign wealth fund investments and to aid international bodies in their efforts to craft a voluntary code of conduct to oversee these practices. Last Fall, the International Monetary Fund began to develop a code of conduct to address these issues, a project which continues – and the Organization for Economic Cooperation and Development is developing best practices guidance for countries receiving these types of investment.

During this upcoming webcast – “The Rise of Sovereign Fund Investing” – an expert panel will analyze the issues that should be considered for a sovereign wealth fund investment.

Sovereign Wealth Funds: The SEC’s Perspective

Several months ago, John Olson posted this blog on Harvard Law School’s “Corporate Governance Blog”: “I’m posting a too little noticed speech by SEC Chairman Cox, delivered a month ago in Washington, in which he discusses the growing concerns with the role of sovereign wealth funds and government-affiliated public companies in global securities markets and the impact of such government-related concentrations of capital, and related market influence, on corporate ethics and policy, transparency and the integrity of financial reporting. What about the values of corporate governance, and shareholder power, when the controlling interest or “golden share” is held by a government, particularly a government that itself does not practice transparency or tolerate democracy as we know it?”

In addition, there is this Congressional testimony:

– “Sovereign Wealth Funds and Public Disclosure” – SEC Enforcement Director Linda Chatman Thomsen (2/7/08)

– “The Regulatory Framework for Sovereign Investments” – SEC Office of International Affairs Director Ethiopis Tafara (4/24/08)

Environmental and Social Surveys: Your Turn

A member recently asked how many companies participate in taking environmental and social surveys, ratings, etc., such as the Carbon
Disclosure Project, Dow Jones Sustainability Index, etc. Please take a moment for this survey:

Opinion Polls & Market Research

– Broc Romanek