Five questions with Norges Bank Investment Management

Jan 17, 2018
Marthe Skaar, communications and external relations manager at the world’s largest sovereign wealth fund, talks ESG, children’s rights and being forthcoming on social issues

How has the importance of ESG issues changed in recent years? Do you think investors in general are paying more attention to these issues?

As a long-term investor, we rely on sustainable economic growth to create long-term returns. Sustainability and governance issues have thereby increasingly come to our attention, and managing these is an embedded part of the management of the fund.

ESG issues are all important elements in our work with responsible investment. We seek to promote the long-term economic performance of our investments and reduce financial risks associated with the environmental and social practices of companies we are invested in.

Social issues are an important element of our work with responsible investment. We base our work on international standards and have clear expectations of companies on these issues. We use this as a foundation for our dialogue with companies and our voting. In addition, we assess ESG risks across the fund.

Can you provide any examples of situations where NBIM has felt the need to engage with companies over social issues, how that engagement went and what the outcome was?

We have had a focus on children’s rights for more than a decade and in 2016 we published an expectation document on human rights. As an investor, it is important for us to support our companies in these efforts. As an example, through our involvement in the Social and Labor Convergence Project we have had a focus on how companies can assess social and labor conditions in their supply chains, and will collaborate with leading companies across the sector.

With ESG, what do you want to see from companies in terms of their communication around these issues?

In our expectations, we emphasize how companies should respect human and children’s rights in their own operations, as well as in supply chains and business relationships. Companies should publicly disclose information on their human rights and children’s rights strategy, policies, risks and impact assessments, as well as through engagement with stakeholders and policy makers.

How do you want companies to communicate when there is a problem in this area?

We encourage companies to be transparent about the dilemmas they face, and the priorities they set to address these.

Finally, what do you want from investor relations when it comes to these issues?

We encourage companies to have in place strategies on how to deal with ESG issues and disclose their commitment, strategy, policy and processes. For investors, it is important to have quantitative information on these issues and we therefore encourage companies to use metrics that enable year-on-year comparison, in line with applicable internationally accepted reporting or initiatives.

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