Norway oil fund begins policy of revealing how it votes

Norway's $880bn oil fund will on Wednesday usher in a new era in corporate governance when it begins to disclose in advance how it will vote at companies' shareholder meetings, in a bid to become a more active investor.

As part of its initiative, the sovereign wealth fund - which is the world's largest - will also reveal that it is backing shareholder resolutions at BP and Royal Dutch Shell to force the oil companies to reveal more about how they are tackling climate change.

This year, the fund is aiming to give notice of its voting intentions at the annual meetings of up to 10 companies it backs, with the "clear ambition" to expand the practice to more of the 9,000 companies in which it holds stakes.

Several other large investors disclose their votes either just before or after annual meetings. But none has done so long enough before a vote to influence other shareholders - meaning that the Norwegian fund's move will be heavily scrutinised.

Petter Johnsen, chief investment officer for equity strategies at the oil fund, told the Financial Times that the main goal was to increase transparency - one of the main requirements of the Norwegian government.

However, he added: "It is not a solicitation or a direct encouragement on how others should vote but of course we realise that by doing this - pre-disclosing our voting intentions on relevant or notable cases where we have firm views - that we could increase our influence as a shareholder."

At BP and Shell, new shareholder resolutions asking the companies to explain how they are managing greenhouse gas emissions, were filed by the Church of England and dozens of other investors. They also call on the groups to reveal how resilient their businesses are to global climate action and if executives are incentivised to pursue further fossil fuel exploration. Both BP and Shell have backed the resolutions.

Mr Johnsen said he hoped the oil fund's vote could have "a signal effect" and influence other petroleum companies to adopt similar reporting. BP and Shell are two of the Norwegian fund's largest holdings, worth about $6.8bn combined.

More broadly, the fund is hoping to add its voice to the debate ahead of annual meetings, which Mr Johnsen said was often "very polarised" between the company and the proxy advisers that advise its shareholders. "A range of views, vote recommendations and voting intentions from advisers, the company itself, and investors would be a positive development," Mr Johnsen said.

Norway's oil fund is one of the world's biggest investors, owning on average 1.3 per cent of every listed company in the world and 2.5 per cent of every business on a European stock market.

Mr Johnsen said the fund would start disclosing its voting intentions gradually and then build up the programme, as it currently has fewer than a dozen employees working on active ownership.

The oil fund, which has quadrupled in size in the past eight years, has taken a number of steps recently to become a more active investor including seeking a bigger role in the selection of company directors and by appointing a corporate governance advisory board.

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