NBIM calls for EC to go further on sustainable finance strategy

Norges Bank Investment Management (NBIM), which is responsible for the investments of the Government Pension Fund Global (GPFG), has called on the European Commission (EC) to go further on its sustainable finance strategy.

In response to the EC’s consultation on its renewed sustainable finance strategy, NBIM highlighted three areas it believes are important for responsible investment, which it says would “benefit from further harmonisation at European Union level”.
They are: corporate sustainability reporting, supply chain due diligence and shareholder voting.

For example, on corporate sustainability reporting, NBIM said it welcomes the commission’s decision to revise the Non-Financial Reporting Directive. However, it would like to see the commission build on existing international standards, to ensure comparability of disclosures at international level.

“For sustainability information to support investment decisions, risk management processes and ownership activities across a diversified portfolio, it must be consistent and comparable across companies and over time,” its letter stated.
In terms of supply chain due diligence, NBIM noted that the long-term legitimacy of sectors and markets depends, among other things, on operations and products that are ethically acceptable.

Therefore, it believes it would be helpful to have a European harmonised approach to supply chain due diligence, that would implement international standards in a consistent manner, thereby ensuring a level-playing field for companies operating in the single market.

On shareholder voting, NBIM same that to be able to exercise their ownership rights, investors need to be able to vote at company meetings in all markets. However, it sometimes encounters obstacles due to manual processes, lack of standardisation and diverging rules.

“We would thus welcome further harmonisation of rules, for instance regarding the cut-off date, the timing between the receipt of the meeting’s materials and the deadline to cast vote, as well as the introduction of automatic vote confirmation (not solely on request).”

NBIM also believes that the right for shareholders to file proposals could benefit from further harmonisation at EU level.

“Shareholder proposals are an important feature of the corporate governance ecosystem and, in certain markets, they have been instrumental in spurring adoption of best practices on environmental and social matters and in flagging material risks,” NBIM stated.

“Further harmonisation would, in our view, not necessarily entail removing the ownership thresholds for filing a proposal, but rather instituting a more streamlined and straightforward filing process that long-term investors with a reasonable stake in the company can utilise to raise important matters at annual meetings.”

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