Directors at Norway’s sovereign wealth fund, the world’s single largest investor, have been told that they will lose their re-election to the board if they do not take tackling the climate crisis, human rights abuses and boardroom diversity as seriously as they should.
According to Carine Smith Ihenacho, the chief governance and compliance officer of Norges Bank Investment Management, which manages more than 13tn Norwegian kroner (£1tn) on behalf of the Norwegian people, the fund was preparing to vote against the re-election of at least 80 company boards for failing to set or hit environmental or social targets,
“We all know, we live in a world with a climate crisis, and we have a role to play and then companies have a role to play. So we have stepped up our expectations towards the companies when it comes to setting targets to get to that net zero [emissions] by 2050 target. And we will push the companies more in setting targets and understanding how they’re going to get there,” ” Smith Ihenacho was quoted as saying.
It comes as the prime minister of Norway, Jonas Gahr Støre, bowed to public pressure to release more money from its oil profits to help support Ukraine. The country donated 10bn kroner in civilian and military aid last year.
“We are in a situation where we have room for action due to extraordinary income from the petroleum sector,” he said. “We are now stepping up this aid. We will contribute even more to the repair and reconstruction of damaged infrastructure.”
Ihenacho said that the fund, which this week recorded a loss of 1.64tn kroner for 2022, expected all large carbon emitters to set emissions targets now, and all other smaller companies to have done so no later than 2040.
“We also want companies to publish scenarios including [what happens if temperatures rise by] 1.5C so we can actually understand how they are going to get there,” she said, adding that only 17% of the more than 9,000 companies that the fund invests in had set “clear science-based net zero targets”, and the fund is actively “pushing” the remaining 83% to act fast to set their targets.
“If the companies are totally unresponsive to what we say, we have to step up,” she said. “What we’ve done so far for, let’s say, the worst companies – those that don’t even have any targets, no reporting around climate risk – we have started to vote against the board as we say the board is really accountable for this.”
Last year, climate action unaccountability led the fund to vote against the entire board of 18 companies and Smith Ihenacho warned that in the coming spring AGM season, there would be a “big step up in how we vote against board members” and said the fund would vote against at least 80 companies in the next few months and if there was still no improvement the fund may sell its stake in the companies.
Story was adapted from the Guardian.