Norway’s $1.1tn oil fund quizzed Amazon about human rights, Citigroup about anti-money laundering systems, and General Electric and Microsoft about executive pay as it stepped up meetings with companies in the past year.
The fund is increasing its work on sustainability and issues such as tax, talking to Toyota and Volkswagen about their sourcing of cobalt and Hershey about the use of child labour and deforestation in the cocoa supply chain, according to its 2019 responsible investment report.
“The way companies approach these themes will have an impact on how they create value in the long term,” said Carine Smith Ihenacho, chief corporate governance officer at the oil fund’s manager.
The fund has been grappling in recent years for what its soaring size — it has quadrupled its assets in the past decade and on average owns 1.4 per cent of every listed company globally — means for how it deals with companies, a challenge outgoing chief executive Yngve Slyngstad last week called the biggest facing the investor.
Ms Ihenacho stressed the fund issued a number of expectation documents on “important themes” such as board composition, human rights, anti-corruption measures, and executive pay.
Its sustainability report details some of the 3,412 meetings it held with 1,474 companies last year — up from 3,256 in 2018.
It spoke to Citi and 13 other banks about their anti-money laundering systems after a series of scandals involving lenders such as Danske Bank, Swedbank and ABN Amro. The fund also pushes companies to have a human rights policy and talked to Amazon about the ecommerce retailer’s newly issued principles.
The disclosure offers a rare insight for how the world’s largest sovereign wealth fund interacts with its biggest shareholdings.
The oil fund also revealed how it had voted against four of its top five shareholdings at their annual meetings, namely Apple, Alphabet, Nestlé and Amazon on issues such as pay and “overboarding” — where non-executive directors have too many positions. Other targets for its votes against the board’s recommendations included Facebook, Tencent, and JPMorgan Chase.
The $1.1tn fund releases all its votes a day after annual meetings, but is gearing up to announce them before all AGMs by the end of 2022 in a big shift of strategy. Ms Ihenacho said the fund might increase its staffing by “one or two” but was committed to being cost-efficient.
The Norwegian fund showed how selling out of big coal producers and users led to its return increasing last year, bucking a long-term trend. The fund is barred by Norway’s parliament from owning certain stocks including the producers of tobacco and nuclear weapon parts. Those so-called product-based exclusions have traditionally lowered the fund’s returns but the ban on coal companies added 0.08 percentage points to its equity returns in 2019.