NBIM announces greatly stepped-up voting and engagement on behalf of sovereign wealth fund

Norges Bank Investment Management (NBIM), which manages Norway’s €785bn sovereign wealth fund, says that in keeping with the fund’s new responsible investment guidelines, it voted at 7,084 annual general meetings (AGMs) of investee companies during the second quarter.

In its latest quarterly report, NBIM also said that it voted on 1,180 shareholder proposals during the second-quarter AGMs, including 49 environmental and social issues that are of particular concern to the GPFC. Regarding corporate governance, the manager backed 80 proposals calling for proxy access – that is the right of shareholders to nominate board directors. Fifty of them passed.

“In the second quarter, we also began announcing our voting intentions at selected companies ahead of the meetings, and sometimes we informed the company about the reasoning behind them,” said NBIM, adding that 51 firms had been informed so far this year.

NBIM’s increased active ownership last quarter follows new responsible investment guidelines for the GPFC that took effect in March. Under them, NBIM says it will consider ESG (environmental, social and governance) issues as part of its risk analysis, engage companies on such issues and seek to vote its shares at all AGMs.The guidelines also state that the Council on Ethics is to advise NBIM on company exclusions from the GPFC “in accordance with the management mandate laid down by the (Norwegian) Ministry of Finance.” However, NBIM may also exclude investees from the GPFC for its own ESG reasons. Indeed, the manager announced last February that during 2014, it had divested 114 companies from the fund for these reasons.

In related news, Canadian NGO Corporate Knights is offering students at York University in Toronto the chance to win up to $10,000 in return for devising a scenario under which the GPFC’s would be “decarbonised.”

According to Corporate Knights, the MBA students will have to meet four objectives, including minimising the fund’s carbon footprint; reduce risks that might strand assets; maximise returns and engagement impact with investees; and position the fund to thrive in a world “that does not exceed an average 2-degree (Celsius) temperature increase.”

The students will present their scenarios before judges during the World Economic Forum summit in Switzerland next January. Said Corporate Knights: “The MBA team that can show the best returns with the lowest portfolio carbon footprint (for the GPFC) will take the top prize and send a strong message to investors around the world.”