[2][3][4][5][6] They are a consequence of the concern of investors and regulators to establish management principles addressing the inadequate transparency, independence, and governance in the industry.
They are guidelines to be followed by sovereign wealth fund management to maintain a stable global financial system, proper controls around risk, regulation and a sound governance structure.
[12] The IWG-SWF then drafted the 24 Santiago Principles, to set out common international standards regarding transparency, independence, and governance which SWFs might follow.
[10][13] Natural resource-rich developing economies are typically encouraged to adopt good governance standards for sovereign wealth funds, such as the Santiago Principles, which emphasize transparency, accountability, and sound investment practices.
This approach is often preferred over local content policies, which can foster corruption and rent-seeking behavior in contexts with weak governance.