The manager of Norway’s NOK12trn (€1.16trn) sovereign wealth fund has suggested the new updated guidelines on corporate governance being produced by the OECD be more specific about best practice on shareholder voting, with the giant investor saying there are still problems when it comes to exercising voting rights internationally.
Norges Bank Investment Management (NBIM), which manages the Norwegian Government Pension Fund Global (GPFG), made the remark in its response to the OECD’s consultation on the revision of the G20/OECD Principles of Corporate Governance.
NBIM welcomed many elements of the draft update to the code – a set of principles which it said formed the basis for its own positions on governance matters. It said the OECD principles highlighted the need to eliminate impediments to cross-border voting, and the right of shareholders to obtain relevant information on a timely basis.
“Yet, investors still encounter obstacles in the exercise of our voting rights,” wrote Carine Smith Ihenacho, NBIM’s chief governance and compliance officer, and Severine Neervoort, lead ESG policy adviser in the letter to the OECD.
The pair said in the response, published on NBIM’s website, that these problems had been outlined in one of its documents entitled: Asset manager perspective on the shareholder voting process.
“The Principles could be more specific on best practices to eliminate impediments to cross-border voting,” NBIM said.
Acknowledging the references in the consultation document to the importance of companies managing climate related risks and opportunities – which they said was a priority topic for NBIM – the Oslo-based manager also said:
“The wording of the revised guidelines might need to be amended, to reflect that companies must address all material sustainability risks and opportunities, not only climate change.”
As an example, the principles could mention human capital management, Smith Ihenacho, and Neervoort wrote.
This was a material topic, they said, which was increasingly important for value creation and profitability.
“We believe that companies that invest in their workers, both own employees and workers in the value chain, are more successful in the long run,” they said.
Another suggestion made by NBIM for the update to the principles, is that the OECD could refer directly to the upcoming IFRS Sustainability Standards within corporate sustainability reporting.
As a global investor, the pair said, NBIM needed information on companies’ exposure to sustainability risks and opportunities, how these were managed, and relevant performance metrics, to be reported in a consistent and comparable way across markets.
“That is why we are supportive of the International Sustainability Standards Board (ISSB)’s mission to develop a comprehensive global baseline of corporate sustainability disclosures,” NBIM said.
Launching the consultation on 19 September, Carmine Di Noia, director of the OECD Directorate for Financial and Enterprise Affairs, said the update of the G20/OECD Principles of Corporate Governance was coming at an important juncture for the corporate sector, with the stakes being high for all market participants and stakeholders, from investors to companies, their employees and indeed the broader public.
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