with loosely defined objectives, the executive (through the cabinet) determined spending priorities in a very autonomous fashion. Although there were ex post considerations of these decisions that could have prompted the legislature’s refusal to approve further transfers into the fund, these were rather weak and could not easily reverse a spending decision once it had been made.

Since a baseline analysis was not undertaken, it is difficult to assess to what extent the fund was able to achieve its policy objectives. In 1995, the fund’s mandate was put to a provincial referendum, and its domestic development role ceased in 1997. Since then, it has been a pure savings fund, operating as a commercial investor with the sole objective of maximizing financial returns for its shareholders, the citizens of Alberta.

_Sources:_ Bacon and Tordo 2007; Warrack and Keddie undated; Smith 1991.

Other sovereign funds with a domestic investment mandate, such as Malaysia’s Khazanah Nasional Berhad and Singapore’s Temasek, appear better able to ensure market validation and generate financial returns while supporting their national economies. These funds’ initial capital consisted of a portfolio of stateowned enterprises (SOEs) and other assets destined for full or partial privatization. As such, they acted as state-owned holding companies. Because these funds’ role was to privatize state assets, their management and investment decision-making processes have, since the start, been exposed to and validated by market forces. The funds have since expanded into foreign assets while maintaining their public policy objectives. For example, Khazanah’s foreign investments are to some extent driven by the purpose of strengthening sector and industry links that promise to benefit Malaysia’s economy and Malaysian companies.

# **5. A Double Bottom Line**

In principle, the policy objectives of an investment should be expressed in terms of its ERR estimated in accordance with one of several accepted methodologies (see appendix B). Although externalities can be hard to identify and objectively quantify, the ERR provides a single estimate of the social and economic impacts of an investment project. In practice, however, most SIFs use simpler, albeit less comprehensive measures. For example, the GEEREF measures its policy achievements in terms of the amount of clean power generated. The EFSI’s main policy success benchmark is the amount of external investment unlocked by its guarantees for investment in the fund’s defined priority sectors, with the aim to generate a 1:15 multiplier on its investments. The ISIF measures its policy objectives against the triple criteria of additionality, no displacement, and no deadweight, as illustrated in box 5.

**Box 5. The Double Bottom Line of the Ireland Strategic Investment Fund**

The Ireland Strategic Investment Fund (ISIF) started operations in December 2014 with €7.6 billion capital from the National Pensions Reserve Fund. The overarching purpose of ISIF is to invest on a commercial basis in a manner designed to support economic activity and employment in the State. The fund has a stated target of a 1:2.6 multiplier on its invested capital.

ISIF’s act of establishment lists the following investment criteria: 13