Norway’s $1tn oil fund (Norges Bank Investment Management, “NBIM”) has announced that it will begin to place greater focus on corporate governance and the role of the board during the coronavirus pandemic.
Carine Smith Ihenacho, NBIM Chief Corporate Governance Officer, said that NBIM wants to be supportive of the 9,000 companies it invests in worldwide, as those firms deal with the Coronavirus pandemic, but noted that the composition and effectiveness of boards is all the more important during the crisis. “What companies need now more than ever is a strong board that can take them through these difficult times,” said Ms Ihenacho. “A board that does not just look at short term but on the long term. Our focus on corporate governance is very much at the heart of discussions with companies,” she explained.
The state oil wealth fund is one of the world’s most important investors, owning on average 1.4 per cent of every listed company worldwide. It has recently stepped up its responsible investment work. Ms. Ihenacho said NBIM was trying to continue in doing this work but, because almost all employees were working from home, the fund often didn’t get confirmation that its votes were recorded correctly.
However, the oil fund has started dialogues about sustainability efforts with many of its portfolio companies and plans to continue those conversations. “It doesn’t mean we’re not going to have them, we’re just postponing them somewhat,” Ihenacho said of the discussions.
NBIM has voted on more than 45,000 resolutions so far this year at annual meetings and currently publishes its votes one day after. It promised to publish all voting intentions before the 2022 meetings, and will also publish reasons for voting against any board recommendations — which it did 6,000 times last year.
As noted in our recently released 2020 Compendium, institutional investors worldwide are placing increased emphasis on active portfolio stewardship. While Environmental and Social elements of ESG related analysis tend to receive most press, many investors are placing increased focus on Governance concerns — a trend we expect to grow.