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RIYADH: Saudi Arabia’s sovereign wealth fund has maintained its leading position in the Middle East, rising five places to take second place among 100 sovereign wealth funds.

The 2024 Governance, Sustainability and Resilience Scoreboard published by the Global SWF data platform shows that the Kingdom’s fund improved its assessment score from 92 percent the previous year to an impressive 96 percent.

In addition, over the past five and a half years, PIF has reached the top position in the world in deploying fresh capital.

GSR’s assessment tool considers crucial factors such as transparency and accountability, impact and responsible investment, and legitimacy and long-term sustainability.

The scoring system consists of 25 separate elements: 10 for governance, 10 for sustainability and five for resilience. Each item is given a binary answer, with equal weight, and converted into percentage points.

“The presence of SWF in Saudi Arabia is proof of the effort that some of the Middle East funds are making to be at the forefront of best practices in the region,” the agency commented.

Chad Richard, PIF’s head of strategy development and innovation, said: “The report reinforces PIF’s status as one of the world’s leading impact and responsible investors with world-class governance and sustainability practices.”

According to Richard, Saudi Arabia’s sovereign wealth fund has been at the forefront of driving the global clean energy transition. It held the largest ever voluntary auction of carbon emissions worldwide, selling 3.6 million credits to international companies.

PIF has also pioneered the issuance of green bonds, including the first Century Green Bond, totaling $8.5 billion. It was also the first fund in the region to pledge to achieve net zero emissions by 2050.

These efforts underscore PIF’s commitment to investing in a cleaner and more environmentally conscious economy and promoting sustainable growth domestically and globally.

In 2024, state-owned investors face a challenging environment of volatility and uncertainty. The report mentioned that despite this, global stocks experienced strong gains in the first half of the year, with the S&P 500 and Nasdaq hitting record highs on June 18.

The S&P 1200 Global index also achieved a significant year-on-year increase of 11.6 percent. Bonds and hedge funds showed a more modest increase of 0.5 percent and 5.5 percent, respectively.

Private equity markets, including private equity and infrastructure, saw moderate gains, while real estate declined 5.5 percent from December 2023.

Geopolitically, conflicts in Ukraine and Palestine and tensions between China and the United States persist. Oil prices remain high at $83 per barrel, which favors sovereign wealth funds in oil-rich economies.

“In the first half of 2024, investments will again be led by the Oil Five – Saudi PIF, Abu Dhabi ADIA, Mubadala and ADQ, and Qatar’s QIA, which has invested $38 billion in 56 different deals. This number is more than double what Maple Eight – the largest Canadian fund – deployed and almost eight times what Singaporean funds spent,” the report said.

Middle Eastern funds showed a remarkable improvement in the global sustainability ranking: from 32 percent in 2020 to 48 percent in 2024, despite stricter sustainability criteria introduced this year.

Among the 22 GCC funds, the report highlighted that PIF continues to lead the charge and has come a long way, with its score increasing from 28 percent in 2020 to 96 percent today.

He also mentioned that the Saudi fund voluntarily publishes an allocation and impact report and conducts self-assessments based on the Santiago Principles, despite not being a member of the International Forum of Sovereign Wealth Funds.

Abu Dhabi’s Mubadala is following a similar path and plans to issue its first annual impact report in the second half of 2024.

According to Global SWF, state-owned investors such as sovereign wealth funds and sovereign wealth funds have reached record highs in assets under management. SWFs manage more than $12 trillion, while PPFs oversee more than $24 trillion, reflecting strong financial performance and growth beyond 2021 levels.

In the first half of 2024, sovereign investors participated in 27 megadeals, each worth more than $1 billion in investments or sales, the report added. Notably, the Saudi PIF ranked fifth, seventh and eighth among the 10 largest and most significant investments during this period.

According to the report, the pursuit of sustainability goals at the organizational level influences the investment preferences of SOIs. In a significant shift, investments in green assets, primarily focused on renewable energy, exceeded investments in black assets such as oil, gas and mining for the first time in 2021. This trend continued in 2022, 2023 and the first half of 2024. .

According to graphs in the report, PIF has the second largest portfolio weight among SOIs invested in their domestic economy, with 73 percent, after Abu Dhabi’s ADQ leads with 89 percent.

The Saudi fund also stands out with its strong preference for direct private equity investments and its significant domestic focus.

Specifically, it targets critical sectors of the Saudi economy, including sports and leisure, tourism and gambling, and construction and heavy industry.

It plays a key role as an economic catalyst and facilitator in the realization of the Kingdom’s 2030 vision. Its aim is to promote the growth of the private sector, expand the country’s industrial base and create employment opportunities, increase the participation of women in the labor market, and attract foreign direct investment. and the development of the country’s financial markets.

PIF also produced strong financial results in 2023, with income from its diverse investment portfolio reaching SR 331 billion ($88.3 billion). This represents an increase of more than 100 percent compared to 2022, indicating a strong return and progress towards its long-term goals of driving the Kingdom’s economic transformation.

The 2023 consolidated financial statements prepared by KPMG confirmed compliance with the International Financial Reporting Standards and the listing requirements of the London Stock Exchange.

PIF’s financial results for 2023 underline its strong financial and investment position: Moody’s rated A1 with a positive outlook and Fitch rated A+ with a stable outlook. These ratings confirm the fund’s stable financial position and consistent performance in the global market.

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