World’s Biggest Wealth Fund Accelerates Transparency Push

Norway’s $1.2 trillion wealth fund will publish all voting intentions ahead of shareholder meetings from 2021, which is at least one year earlier than previously indicated.

The world’s biggest sovereign investor says it wants to be more transparent in how it exercises its ownership, in a bid to promote good corporate governance and similar goals, including environmental standards. The fund has already started explaining its reasoning when it votes against company boards.

“Our intention is to provide more information to the market and to be fully transparent about how we use our voting rights,” Norges Bank Investment Management, said in a report on Friday, as part of a review of its work on responsible investment over the past 20 years.

The fund also said it was “concerned that a lack of information makes the market for voting advice not fully efficient.”

Norway’s wealth fund, which was built from the proceeds of the country’s oil and gas production and now owns about 1.5% of stocks worldwide, invests according to a broad set of ethical principles. These include a ban on some weapons, tobacco and most coal investments, in addition to rules on human rights and greenhouse gas emissions.

The fund had about 79 billion kroner ($9 billion) in so-called environmental mandates at the end of 2019, and said its experience with investing in companies in this category had been “good, but not without challenges.”

“The market is still characterized by frequent and major changes, both in the form of an ever-changing opportunity set with disruptive technology and new market entrants, and in the form of unpredictable policy frameworks,” it said. “Deep analytical resources need to be deployed to avoid disadvantaged companies while uncovering disruptors and winners.”

The fund has been cleared to venture into renewable energy infrastructure under these mandates, but has yet to make its first investment. The effort will be led by outgoing Chief Executive Officer Yngve Slyngstad, who is set to move to London after Nicolai Tangen succeeds him next week.

“Over time, we expect our renewable investments to diversify the fund and generate higher returns than the assets we sell to finance their purchase,” the fund said.

©2020 Bloomberg L.P.

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