$1.4 trillion Norwegian oil fund to step up ESG propositions to US companies

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The $1.4 trillion Norwegian oil fund will step up its use of shareholder proposals to send messages on environmental, social and governance topics to US companies after quietly testing them at a limited number of annual meetings.

The world’s largest sovereign wealth fund presented shareholder proposals on climate for the first time this year to four US companies but has not publicized them so far, its corporate governance boss told the Financial Times.

Two companies – Packaging Corporation of America and Marathon Petroleum – made a climate pledge, so the fund withdrew its proposals while in two others – NewMarket and Westlake – the annual meeting voted on the oil fund’s motion.

“It was new for us. It’s a test case with four companies,” said Carine Smith Ihenacho, chief corporate governance officer of the Norwegian fund.

He added that the fund considered the process a success and will likely step up its use of shareholder motions in the future.

“We would like to do more on climate but also look at other areas of the ESG spectrum,” he said. “It will most likely be in the United States.”

Norwegian oil fund is one of the most influential investor voices on ESG, owning on average 1.5% of every listed company in the world.

For decades, she has worried about being too vocal as a shareholder, but in recent years she has taken a more active stance, becoming the first major shareholder to declare how she will vote at the annual meetings of all 9,000 companies she owns. five days in advance.

It’s also escalating its calls for all businesses to set various goals to ensure they do so zero net carbon emissions by 2050 – and its four test proposals this year asked selected companies to do so.

“The beauty is, sometimes we see shareholder resolutions where we agree with 70%, or 40%, or 80%. With this, we express our opinions out there” Ihenacho said.

He stressed that filing a shareholder motion is a last resort, particularly suited to companies in the US, both because it is easier to make proposals there and because American companies have lagged behind their European counterparts on ESG .

“I see the shareholder proposal as a nice addition. It could become a rather important tool. It is nice to be able to formulate our proposal to companies. With the experience we’ve had, we definitely consider it a strong add-on,” he said.

But he stressed that “consistent” voting at annual meetings and dialogue with companies and their boards will remain the most important tools. “We will never reach so many companies with our proposals. It is a time consuming and resource consuming tool,” she said.

At NewMarket, a lubricants and fuel additives maker that has a 72% free float, the oil fund’s proposal received the support of 28% of shareholders, with 60% against and 12% abstaining. Westlake, a chemicals and plastics company, will reveal the results of last week’s annual meeting by Wednesday.

The fund made 21 shareholder pitches to 13 US companies between 2009 and 2015 on proxy access and dividing the role of CEO and chairman, but hasn’t made one since then and hadn’t previously on the climate.

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