Norges Bank slammed over pension fund engagement “secrecy”

Bank says it will shortly publish list of company engagements.

One of the architects of the ethical investment policy of the €250bn ($366bn) Norwegian Government Pension Fund has hit out at Norges Bank Investment Management (NBIM), the fund manager of the pension assets, claiming its activities are “clothed in secrecy” and risk turning its corporate engagement activities for the fund into a “side-show”.
In a keynote speech this week at a conference in Oslo organised by the Norwegian government, Hans Petter Graver, Dean of the Faculty of Law at the University of Oslo and advisor to the state on the fund’s ethical policy when it was introduced in 2005, said: “We know very little about how Norges Bank carries out its portfolio engagement, how they target companies, what issues are raised and what progress has been made.”
The audience for the speech included HRH Norway’s Crown Prince Haakon and Kristin Halvorsen, the Norwegian Minister of Finance. Graver said the question of openness about engagement was particularly relevant to pressure on companies over allegations of using child labour that the fund has identified as one of two key lobbying issues. He said: “How many companies has the fund talked to about this? Is it co-operating with non-governmental organizations and does it look broadly at the human rights questions linked to child labour. It’s difficult to see why the bank would be confidentialabout this. It risks making its engagement a side-show.”
NBIM said it would shortly publish a list of the companies it has engaged with. Knut Kjaer, former chief executive of NBIM, said the manager had looked at 200 companies on the issue of child labour in 2007 and contacted 50 for further discussion. The fund has to date banned three companies from investment for using children as employees, contrary to United Nations conventions. Grave’s criticisms are indicative of a charged debate taking place in Norway over the fund’s divestment programme. The government has initiated a review of the fund’s ethical policy, which will be published this summer.
Tension is centering on whether the controversial divestment strategy might be the most effective way of applying ethical pressure on companies. Norges Bank chiefs said at the conference that the divestment policy had made engagement difficult for the fund manager because it puts companies on guard against a public blacklisting.
In her opening speech to the conference, Norwegian Minister of Finance, Kristin Halvorsen, said: “Socially responsible investments used to be a marginal issue for most investors. I believe we are now seeing the beginning of responsible investment becoming mainstream in the investor community.”