Norwegian investors publish ESG company survey results, plan expansion

Proposal to extend initiative into Sweden in 2009.

Sustainable Value Creation (SVC), a group of Norway’s largest institutional investors supported by the Norwegian government has published the results of its first collaboration to influence companies listed on the Norwegian stock exchange to develop responsibly and create long-term value for their owners. In August, the investors surveyed all Norwegian companies listed on the Oslo Børs Benchmark Index. The survey comprised questions on environmental, corruption, human and labour rights policies. It was sent directly to chief executive officers with a copy to the chairman of the board and the head of investor relations and covered four main areas: overall policies and commitments, implementation and adherence, communication and reporting, and board accountability. The survey received a 49% response rate from 76 Norwegian companies. On a weighted scoring system based on 100 points, 3 companies came out as top quartile performers: Norsk Hydro, Orkla and Statoil Hydro. There were 24 second quartile performers, 7 third quartile companies and 3 in the bottom quartile. Significantly, the survey produced comparison graphs comparing company responses across the main questions and response themes.Overall, Norwegian companies scored lowest on human rights criteria, but relatively well on issues such as employee safety. The survey reveals that companies tended to fall down on reporting of ESG issues, notably in setting targets, despite relatively high board awareness of ESG issues. Ten of the responding companies are signatories of the UN Global Compact, while 23 are not and 2 plan to do so. The Norwegian initiative is significant because it is one of the first times a major group of asset owners and fund managers have conducted their own corporate social responsibility surveys on issues they believe are important to investment decisions. The investors, which run NOK 2700 billion (€326bn) in assets, of which NOK 1000bn is invested in the Norwegian market, are Alfred Berg, DnB NOR, Folketrygdfondet, Gjensidige, KLP, Nordea, the Norwegian Ministry for Trade and Industry, Odin, Oslo Pensjonsforsikring, StatoilHydro Kapitalforvaltning, Storebrand and Vital. At its launch, Kristin Halvorsen, Norwegian Minister of Finance, said: “Never before has such a broad group of investors collected and compared the companies’ performance within these areas. This makes the project unique and very exciting. What we are
doing in Norway is noticed internationally.” Jeanett Bergan, head of responsible investment at KLP, the Norwegian insurer, said the survey response was very positive: “Notably, lots of small companies that haven’t been asked these questions before came back with answers.” She said the initiative hopes to expand into Sweden in 2009.The Norwegian investors, who themselves have significant interests in the Swedish market, are currently in discussions with large Swedish peers. Bergan said she believed it could also be an interesting project to develop alongside investors in emerging markets over time. The English version of the report will be published next week.