Norway’s oil fund is calling on the European Commission to harmonise the approach to supply chain due diligence in Europe as part of a planned renewed sustainable finance strategy.
In its response to the Commission’s consultation on the strategy, which ends next week, the manager of Norway’s NOK10.3trn (€963bn) sovereign wealth fund said: “It would be helpful to have a European harmonised approach to supply chain due diligence, that would implement international standards in a consistent manner, thereby ensuring a level-playing field for companies operating in the Single Market.”
In its letter, NBIM’s chief corporate governance officer Carine Smith Ihenacho and Séverine Neervoort, senior analyst, corporate governance wrote that the subsidiary of the Norwegian central bank had an inherent interest in how companies managed their use of natural and social resources and addressed supply chain risks.
This could have a bearing on their ability to create financial value, the pair said.
Firms should understand the broader consequences of their operations on society and the environment, they said.
“They should have an adequate supply chain management system in place, including policies and measures for detecting, preventing and responding to environmental and human right risks in their supply chain,” Smith Ihenacho and Neervoort wrote.
NBIM also made suggestions about EU harmonisation in two other areas — corporate sustainability reporting and the shareholder voting process.
On corporate sustainability reporting, it said investors required more information from companies about their risk exposure and management, in order to better integrate environmental and social risks into financial decision-making.
In their final point, concerning shareholder voting, the NBIM pair also reiterated concerns expressed in other consultations, telling the Commission investors needed to be able to vote at company meetings in all markets, but that Norges Bank had encountered obstacles in the past due to manual processes, a lack of standardisation and diverging rules.
“We would thus welcome further harmonisation of rules, for instance regarding the cut-off date, the timing between the receipt of the meeting’s materials and the deadline to cast votes, as well as the introduction of automatic vote confirmation (not solely on request),” they wrote.