Norway’s sovereign wealth fund manager has revealed more about its rationale for starting to file its own shareholder resolutions at company annual general meetings (AGMs) – a forthcoming escalation of its active-ownership work that was flagged up in December in its new multi-year strategy plan.
In an interview with IPE, Carine Smith Ihenacho, chief governance and compliance officer at Norges Bank Investment Management (NBIM), said her organisation could file resolutions if there were no other relevant shareholder resolutions at particular AGMs, or if the wording of existing resolutions did not work for the NOK13.9trn (€1.26trn) Government Pension Fund Global (GPFG).
“What we have done in the past few years is seen shareholder resolutions increasing and we have supported a lot of them,” she said in Oslo on Tuesday.
“Some we haven’t supported, even though we think they are in an area where we have clear expectations – but we have a clear framework for how we vote on this,” she said.
In some cases, she said, NBIM had been unable to back resolutions on a theme it was concerned with, because they were slightly too prescriptive.
“So what we have said is that we will look at filing our own shareholder resolutions and that will typically be either because we think some of the shareholder resolutions are not worded the way we want them to be worded, […] or that the companies haven’t received any shareholder resolutions, but where we think are clearly lagging behind, typically in how companies manage climate risk,” Smith Ihenacho said.
“That’s at least where we will start to look in that space,” she added.
NBIM had so far only said it intended to file shareholder proposals, but not come out with any details yet, she said.
The intention, outlined in the Strategy 25 document published in December, was part of a bolder attitude NBIM was adopting towards climate action, she said, citing the climate action plan released four months ago.
NBIM had worked with climate for more then 15 years and now wanted to do more, she said.
“We’ve got changes to the mandate, and now we’ve said we have a clear goal when it comes to how the companies should manage risk - that the companies should have a target for net zero in 2050,” the governance chief said.
“We will step up our work and be more ambitious in our work when it comes to climate, and filing shareholder resolutions will be part of that,” she added.
Noting reservations NBIM recently expressed about the PRI’s latest proposed strategy changes, IPE asked Smith Ihenacho how positive the SWF manager was about the UN-convened organisation and the path it was on.
“We think it’s an important organisation doing in many respects great work, but also we were slightly concerned about the direction it was going in,” she said.
“If you have an index-near asset manager as we are, the way they work with responsible investment is standard setting, but we also work to influence the companies we invest in.
“We believe very much in being an owner and influencing the companies and we don’t believe its the right way to go to sell out, to take large allocation decisions”
Carine Smith Ihenacho, chief governance and compliance officer at NBIM
“We believe very much in being an owner and influencing the companies and we don’t believe its the right way to go to sell out, to take large allocation decisions – we want, rather, to be an owner and push the companies in the right direction,” she continued.
“Some of the work going on in PRI could be seen as slightly contradictory to that, and we want to make sure we’re part of setting a strategy for PRI that also encompasses the index-near asset managers like us,” Smith Ihenacho said.
A year ago, NBIM’s global head of corporate governance Wilhelm Mohn started sitting on the PRI board, she said.
“We spend a lot of resources being on the board of PRI because we think it’s an important organisation and overall is doing a lot of good work,” she said, even though NBIM had had some questions around some of the body’s initiatives.
Smith Ihenacho said climate was definitely the most interesting aspect of her ESG work at NBIM.
“But we also see climate as being very linked to biodiversity and we recently came out with a biodiversity expectation document, so climate and biodiversity, one, other one is human capital management,” she commented.
“You know, I think that more and more we are seeing the importance of how companies work with their human resources, how important that is for the long-term value creation of companies,” she said.
“And human capital management also includes how they work with diversity.
“And finally it’s effective boards, because what we say is that, in the end, a lot of what companies do boils down the board setting the right strategy. So we are really pushing for competent, effective boards,” she said.