Norway’s $1 trillion plus sovereign wealth fund will ask many of the companies in its portfolio to take more specific action on climate change, according to its head of governance and compliance.
“We have for a long time focused on better company disclosure … Now we are focusing more on actions. So now you need to go from numbers to action, concrete steps that companies are taking to meet the expectations,” Carine Smith Ihenacho said in an interview at the Reuters Next conference.
One of the world’s largest investors, the fund holds stakes in around 9,100 companies worldwide, owning 1.4% of all listed stocks, and is widely regarded in the investment community as having set the pace on a host of issues in the environmental, social and corporate governance (ESG) field.
The fund estimated its portfolio’s carbon footprint was 107.6 million tonnes of CO2 equivalent in 2019, roughly twice what Norway emitted that year.
It was set up 25 years ago to share revenues from Norway’s oil and gas with future generations and has invested abroad in stocks, bonds, property and unlisted renewable projects.
The fund is also for the first time setting out expectations to the companies it invests in on how they protect nature’s biodiversity.
“The first step is really to assess in some depth, which companies are the most exposed, which companies are lagging, and then we’ll engage with selected companies, in particular in exposed sectors, (such as the) food sector, the extractive sector,” Smith Ihenacho said.
“For the voting season it may be that we will start to vote against the company chairs, or chairs of relevant committees, where we believe they’re not addressing this in an adequate manner.”
Earlier this year, the fund told the companies it invests in to boost the number of women on their boards and to consider setting targets if below 30% of their directors are female.
It focused on applying pressure on large and mid-cap companies in the United States and Europe by voting against appointments to the nomination committees of companies that do not have at least two women on the board.
“We voted against more than 150 companies but we have seen progress. Some of those companies that we voted against in 2020 did indeed put women forward for the board in 2021. We were very pleased to see that,” Smith Ihenacho said.
The fund was currently assessing whether to expand the policy to other parts of the world ahead of the next annual general meeting season in 2022.
“It may very well be that we will step up how we vote,” she said.