Government Pension Fund Global, Norway’s giant sovereign wealth fund, has topped the list of the most transparent funds in the 2023 Global Pension Transparency Benchmark, beating last year’s winner CPP Investments by only one point.
The results indicate a heightened focus on transparency and improved practices in the industry with a very tight race among the top funds. The first three funds were separated by only one point each with CPP Investments and AustralianSuper ranking second and third, respectively, overall.
The results this year revealed a jump in the overall quality of pension fund disclosures, with 77 per cent of funds making improvements in their scores.
The results are evidence that increased scrutiny of the transparency of disclosures is driving measurable improvements among some of the world’s largest asset owners, and the benchmark is a facilitator for improved transparency in the industry.
CEM Benchmarking product lead for transparency benchmarking Edsart Heuberger said 58 of the 75 reviewed organisations improved their total transparency scores.
This year the average fund scored 60 out of 100, an improvement of five points relative to the last edition of the transparency benchmark in 2022. In addition, the leaders made marked improvements.
“Four of the five transparency leaders increased their transparency the most: some have publicly declared their intent to be the most transparent pension organisations in the world,” Heuberger said.
The Global Pension Transparency Benchmark, a collaboration between Top1000funds.com and CEM Benchmarking, is a world-first global benchmark measuring the transparency of disclosures of 15 pension systems across the value-generating measures of cost, governance, performance and responsible investments.
It ranks countries on public disclosures of key value-generation elements for the five largest pension fund organisations within each country. The country rankings are now in their third year, with the scores of the 75 underlying funds published for the second time this year.
The GPTB focuses on the transparency and quality of public disclosures with quality relating to the completeness, clarity, information value and comparability of disclosures.
The overall scores and rankings are measured by assessing hundreds of underlying components and analysing more than 13,000 data points.
“It is heartening that the Global Pension Transparency Benchmark is stimulating discussions on transparency and driving organisations globally to improve their public disclosures,” Heuberger said. “Transparency matters. Congratulations to the top-ranking funds on the GPTB for leading the way on transparency and communication quality.”
This year the process has been refined with additional governance measures to ensure better data and assessment.
The scoring process follows a four-tiered system including an initial review; factor-team review; CEM team reviews, including a review by the Top1000funds.com team; and an advisory board review. Following these four steps there is also the chance for a one-on-one informational meeting with the underlying funds.
Advisory board member Keith Ambachtsheer said it was fascinating to see the increases in both fund engagement and in the GPTB scores this year.
“The Peter Drucker observation that ‘what gets measured gets managed’ is alive and well,” he said.
The way the industry has embraced the GPTB is a positive reflection of how seriously funds take transparency, and their drive for
improvement is an indicator of the power of the benchmark which reframes the transparency narrative from a narrow and negative focus on costs to a more holistic and positive concept of transparency that includes governance and strategy, value generation and sustainability.