Investing Responsibly: A Practitioner Perspective

Mr. Snorre Gjerde, lead investment stewardship manager of Norges Bank Investment Management (NBIM) presented a seminar titled ‘Investing Responsibly: A Practitioner Perspective’ on 17 November 2023. This seminar was moderated by Associate Professor Dr Umakanth Varottil. 

By way of introduction, Mr. Gjerde provided a background on NBIM as the entity set up to manage the Norwegian sovereign wealth fund which was established to manage the returns from Norwegian oil and gas resources to benefit present and future generations. He then provided an overview of NBIM’s investments which comprised equity, fixed income, unlisted real estate and unlisted renewable energy infrastructure asset classes with a total market value of about 15 billion Norwegian Kroner. As this fund was owned by the Norwegian people and was set up to safeguard wealth for future generations, it applied a perpetual investment horizon with a long-term mindset. The speaker also elaborated on the fund’s governance model which featured a clear delegation of responsibilities between the Norwegian parliament, Ministry of Finance and NBIM.  

Mr. Gjerde turned to a brief discussion of the theories underpinning active ownership and provided a definition of responsible investment as follows: influencing markets and companies in a sustainable direction to ensure profitability. In this respect, NBIM focused on 3 key approaches related to the market, portfolio, and companies. As regards the market, NBIM worked to promote well-functioning markets through clear statements on its position and expectations. Given its reliance on global frameworks and standards, it also actively engaged regulators and standard-setters by providing feedback on consultation exercises which were also shared on its website. There are at present 10 key themes, in the form of expectation documents directed to company boards which are particularly important to NBIM as a universal investor. These include topics such as climate change, biodiversity and ecosystems as well as consumer interests.  

NBIM also may divest from companies with heightened environmental, social and governance (ESG) risks and it was shown that risk-based divestments have increased the cumulative return on equity management by 0.26% points since 2012. The speaker highlighted that NBIM was also subject to ethical exclusions formulated by the Council of Ethics in which it would not invest in companies which produced tobacco and cannabis as well as certain types of weapons, based their activities on coal, and contributed to the violation of fundamental ethical norms. 

The core of the fund’s mandate is to be a broadly diversified, responsible owner. This means that dialogue and voting are an essential part of the fund’s responsible investment approach. The fund engaged companies on a broad range of ESG topics, through nearly 2,000 company meetings annually. Sustained growth was observed across many topics. NBIM voted on 120,000 resolutions at 12,000 shareholder meetings based on its global voting guidelines. Mr. Gjerde noted that there was an upward trend on sustainability-related shareholder proposals with emerging topics such as racial equity, reproductive rights, animal welfare, and 2050 net zero targets. NBIM also pre-discloses its voting intentions and voting rationale 5 days ahead of company meetings and may file shareholder proposals to enhance engagement.  

The seminar closed with an engaging question-and-answer session between the speaker and the audience.  

Lead Investment Stewardship Manager of Norges Bank Investment Management, Mr Snorre Gjerde, presenting 

Associate Professor Umakanth Varottil, moderating an engaging Q&A 

 
Mr Snorre Gjerde answering a question posed by the audience 

(From left) Mr Snorre Gjerde (Norges Bank Investment Management) and Associate Professor Umakanth Varottil (NUS Law)