The world of finance is constantly evolving, and in 2025, Australian investors, fund managers, and policymakers are paying renewed attention to global standards like the Generally Accepted Principles and Practices (GAPP). But what exactly is GAPP, and why is it more relevant than ever in the current regulatory climate?
Understanding GAPP: The Global Standard for Sovereign Wealth Funds
Generally Accepted Principles and Practices (GAPP), also known as the Santiago Principles, are a set of 24 voluntary guidelines developed by the International Working Group of Sovereign Wealth Funds. Established in 2008, GAPP was created to promote transparency, good governance, accountability, and prudent investment practices among sovereign wealth funds (SWFs) worldwide.
While GAPP was originally targeted at large, government-owned investment vehicles, its influence now extends to pension funds, government agencies, and even private investment managers who want to demonstrate world-class governance. In 2025, as Australian superannuation funds and state investment vehicles seek to attract international capital and comply with tightening ESG requirements, GAPP’s standards are being adopted well beyond their original scope.
- Transparency: Clear disclosure of investment policies, objectives, and results
- Governance: Robust internal controls and clear separation between the government and fund management
- Accountability: Regular, independent audits and reporting to stakeholders
- Prudent Investment: Sound risk management and long-term sustainability focus
Why GAPP Matters for Australians in 2025
With the Albanese government pushing for greater transparency in public investment and the Australian Prudential Regulation Authority (APRA) enforcing stricter accountability standards in 2025, GAPP is now a benchmark for best practice across a range of entities—not just sovereign wealth funds. Here’s why it matters:
- Superannuation Mega-Funds: Australia’s largest super funds, such as AustralianSuper and REST, are increasingly aligning with GAPP to attract foreign investment and assure members their retirement savings are managed responsibly.
- State Investment Initiatives: New state-backed investment vehicles, like the Queensland Future Fund, are adopting GAPP principles to boost transparency and public trust after recent scrutiny over fund governance nationally.
- Private Sector Adoption: Some private investment managers are voluntarily adopting GAPP frameworks as a competitive differentiator, especially when pitching to institutional investors or government partners.
Real-world example: In early 2025, the Future Fund announced its intention to publish a GAPP-aligned transparency report, detailing its risk management framework and performance metrics—a move widely praised by both the government and independent analysts.
Key GAPP Principles and Their Australian Applications
Let’s break down a few of the most critical GAPP principles and how they’re being applied or adapted in Australia this year:
- Principle 1: Legal Framework
GAPP requires funds to establish a clear legal basis for their operations. In 2025, several Australian funds have updated their constitutions and investment mandates to enshrine independence and clarify their relationship with government sponsors. - Principle 6: Accountability and Audit
Funds must subject themselves to regular external audits. APRA’s 2025 policy update now requires large super funds to publish independent audit summaries, mirroring GAPP’s approach. - Principle 19: Responsible Investment
GAPP encourages funds to consider environmental, social, and governance (ESG) factors. Australia’s new Mandatory Climate Risk Disclosure regulations, effective July 2025, mean super funds must now report how climate risk is factored into their portfolios—directly echoing GAPP’s ethos.
For smaller funds and public agencies, adopting even a subset of GAPP’s principles can enhance credibility, streamline stakeholder communications, and reduce the risk of regulatory intervention.
Challenges and Opportunities Ahead
While GAPP sets a high bar, implementation is not without hurdles. Data collection, especially around ESG and climate risk, remains a work in progress for many Australian funds. Additionally, balancing transparency with commercial confidentiality is an ongoing debate—especially as funds invest more heavily in unlisted infrastructure and private equity.
Despite these challenges, the trend is clear: aligning with GAPP is becoming a badge of trustworthiness for Australian investment managers in 2025. As global investors scrutinise governance standards, and as APRA and ASIC ramp up enforcement, those who embrace GAPP are better positioned to thrive.
