Norges Bank refers to two further UN standards in its own principles for responsible investment.
The Guiding Principles on Business and Human Rights outline roles and responsibilities for states and businesses with regard to human
Establishing principles
Standards
We benefit from international
standards that promote long-term
value creation. We contribute to
the development of such standards
and publish expectations of the
companies we invest in.
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rights. The UN Conference on Trade and Development (UNCTAD) has also published Principles on Promoting Responsible Sovereign Lending and Borrowing.
As a long-term and global investor, the fund has an inherent interest in sustainable development.
The Sustainable Development Goals provide a common framework for addressing key global challenges. How national authorities choose to mobilise knowledge, technology and capital to realise the goals will impact on the global economy and the fund’s long-term performance.
Development of international standards We contribute to the development of relevant international standards. We participate in consultations and engage regularly with international organisations and regulators in our most important markets.
When we meet standard setters, we are
interested to learn about their strategic priorities and specific initiatives to promote
well-functioning markets and good corporate governance. At the same time, we can
communicate our own priorities. In 2020, we had meetings with the OECD, the UN Global
Compact, the European Commission, the International Accounting Standards Board, the Global Reporting Initiative and the Sustainability Accounting Standards Board, as well as national standard setters in France, Germany, Sweden, the UK and the US.
We responded to 16 public consultations relating to responsible investment during the year. These consultations concerned topics that are
important to us, such as common standards for sustainability reporting, shareholder rights and responsible business practices. We publish all of our consultation responses on our website:
www.nbim.no.
Common standards for sustainability reporting
Better reporting on sustainability is a priority for the fund. As an investor, we depend on accurate, relevant and timely information on the
companies we invest in. We want to understand the environmental and social issues that could affect companies’ long-term profitability, and how companies address relevant risks and opportunities. In 2020, we published a paper on sustainability reporting as part of our Asset Manager Perspective series. We noted that the quantity of reporting is increasing, but that there is a need for further standardisation to obtain information that is relevant and comparable. We called for reporting requirements based on globally accepted, financially material and standardised sustainability metrics.
Sustainability disclosures should be subjected to similar internal governance procedures to financial disclosures, with final sign-off by the board. As a starting point, companies can look to the industry-specific standards developed by the Sustainability Accounting Standards Boards (SASB) and base broader environmental and social disclosures on standards from the Global Reporting Initiative (GRI).
Increasing attention is being paid to sustainable development and companies’ role in society. We responded to 13 consultations on sustainability reporting during the year. For example, we participated in consultations from the International Financial Reporting Standards Foundation and the European Commission on new and more extensive standards for sustainability disclosures. Corporate sustainability reporting will be important in realising the EU’s sustainable finance strategy.
Establishing principles | Responsible investment 2020 | Government Pension Fund Global
21 Shareholder rights
Good corporate governance is essential for protecting our investments. Through our membership of the International Corporate Governance Network (ICGN), we are helping strengthen shareholder rights in all markets. We participated in the work on updating ICGN’s Global Governance Principles during the year. We stressed the need for effective boards that are accountable to shareholders, long-term incentive plans for management, and increased corporate sustainability reporting.
In a submission to the stock exchange in Hong Kong, we argued that all shareholders in a company should ideally have equal rights. We nevertheless supported the extension of weighted voting rights for strategic shareholders subject to certain restrictions – for example, that these rights must not be perpetual but require periodic shareholder approval.
Responsible business conduct
As a long-term investor, we have an interest in responsible and transparent corporate tax practices. There is ongoing debate in many markets on how companies should report publicly on the taxes they pay.
The OECD continued its work on country-by-country tax reporting in 2020, and we responded to its public consultation in March, stressing the need for well-functioning and predictable tax disclosure frameworks.
We also contributed to a number of initiatives that aim to draw attention to how companies manage tax. Together with Dutch pension fund, ABP, we set up an investor network where we meet 20 other investors twice a year to discuss investors’ expectations of companies when it comes to tax, and to exchange experience from our dialogue with companies on tax issues.
The Global Reporting Initiative (GRI) published a new standard on tax reporting in 2020, covering both disclosures on governance and strategy and public country-by-country reporting. GRI also published proposals to update its Universal Standards, including reporting on companies’
human rights due diligence processes. We supported the proposals, as they could contribute to better corporate reporting on respect for human rights.
We also lent our support to UN PRI’s plans to promote implementation of the UN Guiding Principles on Business and Human Rights among institutional investors. We stressed that it should base its work on existing OECD guidance but also look more closely at the options available to minority investors when it comes to encouraging companies to respect human rights. We noted that institutional investors are governed by mandates that set clear financial targets and also impose other constraints on their investment activities, such as on portfolio construction and risk exposure.
Establishing principles
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Recipient Topic Submitted
IFRS Foundation Sustainability Reporting 17.12.2020
PRI PRI Signatory Survey 2020 24.11.2020
UK Financial Conduct Authority Climate-related Disclosures 21.09.2020
PRI Association Human Rights Framework for Institutional
Investors
18.09.2020
International Corporate Governance Network Review of Global Governance Principles 15.09.2020 Global Sustainability Standards Board Revision of GRI Universal Standards 09.09.2020
The European Commission Renewed sustainable finance strategy 09.07.2020
The European Commission Report of the High-Level Forum on capital markets union
25.06.2020
Global Reporting Initiative Work Programme 2020-2022 18.06.2020
The European Commission Revision of the EU Non-Financial Reporting Directive
02.06.2020
Hong Kong Exchanges and Clearing Limited Weighted voting rights for corporate entities 27.04.2020 Sustainable Finance Committee of
the German Federal Government
Report of the Sustainable Finance Committee 30.03.2020
OECD Review of Country-by-Country Reporting 05.03.2020
The European Commission Impact Assessment on the Revision of the Non-Financial Reporting Directive
25.02.2020
PRI Association Reporting Framework Review – Phase II 28.02.2020
Eumedion Non-financial reporting 01.02.2020
Submissions
Establishing principles | Responsible investment 2020 | Government Pension Fund Global
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Topic Organisation Description
Corporate governance
Asian Corporate Governance Association (ACGA)
Membership organisation for investors and companies
African Corporate Governance Network (ACGN)
Network of director membership organi-sations
Council of Institutional Investors (CII) Association of investors
European Corporate Governance Institute (ECGI)
Academia-practitioner research network
Harvard Law School Program on Corporate Governance
Academia-practitioner research network
International Corporate Governance Network (ICGN)
International association of investors
Sustainability CDP Climate; CDP Forest; CDP Water Environmental reporting initiatives
Institutional Investor Group on Climate Change (IIGCC)
Investor initiative (Europe)
Norsif Norwegian sustainable investment forum
Extractive Industries Transparency Initiative (EITI)
International organisation for transparency in extractive industries
Task Force on Climate-related Financial Disclosure (TCFD)
International principles
Principles for Responsible Investment (PRI) International principles
Transition Pathway Initiative Investor initiative on climate risk
Sustainability Accounting Standards Board (SASB)
International standard for sustainability reporting
United Nations Environment Programme Finance Initiative (UNEP FI)
Multi-stakeholder initiative for sustainable finance
UN Global Compact International principles
UN Global Compact Action Platform on Sustainable Ocean Business
Multi-stakeholder initiative for ocean sustainability