Divestment of companies with unsustainable business models is one way that Norges Bank Investment Management (NBIM) says helps it to meet the United Nations’ Sustainable Development Goals (SDGs).
The giant investor, the arm of the Norwegian central bank that runs the assets of the Government Pension Fund Global, has published a note on how the fund as a responsible investor can support sustainable development and help fulfil the SDGs, saying it depends on sustainable global economic growth to produce long-term return.
“Our ambitions as a responsible investor overlap to a great extent with the SDGs,” NBIM says.
“The fund’s investments in more than 9,000 companies in 72 countries contribute directly and indirectly to a number of the SDGs,” said CEO Yngve Slyngstad in a statement.
“Our most important contribution is to strengthen governance, improve performance and promote sustainable business practices. We invest in developing markets and in companies developing solutions for a more environmentally friendly economy.
“Finally, we divest from companies with unsustainable business models.”
For example, the fund explains that it is not invested in companies that produce certain types of weapons, tobacco, or coal. These ethical exclusions relate to products that could undermine the ambition of SDG 3: Good Health and Well-Being, SDG 13: Climate Action, and SDG 16: Peace, Justice and Strong Institutions.The note contains a graphic showing how its divestments relate to the SDGs (Figure 4, page 10).
Norges said that for several years, it has focused on many of the challenges that are now defined as SDGs – it points to its expectations documents on children’s rights, climate change, water management, human rights, tax and transparency, anti-corruption and ocean sustainability.
But the fund warns against moving too quickly towards additional SDG reporting as there are already reporting standards and industry guidelines in place.
“Rushing the adoption of additional SDG reporting may divert attention from producing meaningful information for investors as provided by existing material indicators.
“We favour the increased harmonisation of company disclosure across sectors and markets according to agreed frameworks and standards.”
Meanwhile, the fund has also released its expectations on ocean sustainability. It emphasises that companies should ascertain that material ocean-related risks and opportunities are integrated in corporate strategy, risk management and reporting. Relevant sectors include ocean-based industries such as shipping, wild-catch fisheries and aquaculture, but also retail, the value chain of plastic products and agricultural goods.