Norway’s sovereign wealth fund is to back shareholder resolutions calling on Europe’s two biggest oil companies, BP and Shell, to reveal how climate change could affect their business models.
The NOK6.4trn (€706bn) Government Pension Fund Global’s declaration was the first time the fund has made its voting intention known prior to a corporate annual general meeting (AGMs).
Norges Bank Investment Management (NBIM), the investment manager of the fund based on revenues from Norway’s oil production, said it will vote in favour of the special shareholder requisitioned resolution, which was submitted for shareholder voting at the AGMs of BP and Royal Dutch Shell.
Petter Johnsen, chief investment officer equity strategies at NBIM, said: “As a long-term investor, we believe that the identification of future scenarios for climate regulation, carbon pricing, and environmental conditions is a useful tool to support strategic decision-making and we thereby support these resolutions.”
The resolutions ask for the companies to give more information on risks and opportunities associated with climate change, NBIM said, with BP’s AGM scheduled for 16 April and Shell’s for 19 May.
According to the proposal, this information should be included as a part of the companies’ annual reporting from 2016 onwards.
Johnsen said that in line with the fund manager’s expectation document on climate change, it believed that boards should recognise the need to make “climate change related challenges and opportunities” part of investment planning and risk management.
It was also important to make sure responsibility was clearly defined within the organisation, he said.
“We commend the Boards of BP and Royal Dutch Shell for recommending support for the shareholder requisitioned resolution,” he said.
Earlier this year, both BP and Shell said they were backing resolutions on climate change submitted by their shareholders.
NBIM said the resolutions at the oil companies supported its own efforts in this area.
“Climate, and possible financial risk connected to this, has been an important part of our responsible management for many years,” it said.
NBIM noted this was the first time it had published its voting intention before an AGM.
It announced last year that it would start going public in 2015 about how it would cast its vote at shareholder meetings.
“We will publish our voting intensions for a selected number of companies and for certain fundamental issues that we emphasise in particular,” it said.
“This is in-line with our strategy plan where it states that we will make our voting intentions public before the annual shareholder meetings to increase transparency, and encourage initiatives to strengthen the vote execution chain,” the manager said.
The focus on oil companies comes days after the Norwegian government said it supported proposals for “broad critera” governing exclusion over climate concerns, but ruled out product-specific exclusions that would make a blanket ban on investment in certain sectors possible.