Each year, the Petroleum Fund votes on more than 120 thousand proposals at public company meetings, and the shareholders themselves put forward an increasing number of proposals.
Karen Smith Inacho
Property and Compliance Manager, Norges Bank Investment Management
This is history
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Shareholder proposals mean that the fund must take a stand on new topics constantly — such as pig care and the right to self-abortion in the United States.
The Petroleum Fund owns stakes in more than 9,000 companies In more than 70 countries. As a shareholder, we have the right to vote in the general meeting of the company. Our goal is to vote on all proposals at all public meetings. It is our responsibility as a large and long-term shareholder. We own an average of 1.4 percent of all listed companies in the world, and 2.6 percent in Europe. This means that our voice matters.
Most suggestions We vote for it promoted by corporate boards. Shareholder proposals made up just 0.3 percent of all last year’s bids. But it is important. The number increases from year to year. They address key sustainability issues, provide opportunities for shareholders to influence companies and are an indication of trends in society.
Comprehensive data about companies and detailed voting guidelines allow us to automate most voting decisions. But it is not possible to automate voting on shareholder proposals. They cover many different and complex topics, often new, and must be considered individually. This is a big and demanding job. At the end of May this year, we voted for 274 shareholder suggestions on sustainability, up from 241 for the full year last year.
New this year was animal welfare At general meetings of restaurants and retail companies. Animal welfare is a closely related topic for many companies in food production, either directly or through supply chains. A proposal called for increased reporting on the risks of using so-called pregnancy cages in McDonald’s pig production.
It will improve the animal welfare at McDonald’s – the oil fund votes against
Also new is the suggestion that the risks and costs associated with the potential reversal of the right to self-abortion in the United States should be reported in many retail businesses. One proposal asked Walmart to consider how this legislation would affect the company’s employment and productivity, whether abortion would be covered by employee health insurance, and whether the company would lobby against legislative changes.
In addition, there have been many contributors’ proposals on climate, particularly around emissions reduction targets in line with the Paris Agreement.
Climate proposals are It is relatively easy to vote for it systematically. We have clear expectations about how companies will deal with climate risks. That’s why we supported the proposals for emissions reduction targets at Chevron and Exxon.
Politicians, passengers and most people
Other issues where we do not have clear expectations are more difficult. In addition, a challenge is that we must vote either yes or no on the proposals where we prefer to say yes – we agree in part, but not on everything.
So we created a framework On how best to evaluate shareholder proposals. We look at three factors: 1) Is supply essential to the company’s operations and profitability? We are a financial investor, so the offering must be linked to the company’s opportunity to create long-term value. 2) Does the proposal go too far in managing details? Investors have delegated responsibility for the company’s strategy and operations to the board and management, and should not make detailed demands. 3) What did the company actually say? We evaluate the Company’s reporting and practices in light of our expectations, and whether the Company has been involved in controversies. We also often communicate with the company to understand the plans and strategies they have.
How did it end? Then with the welfare of pigs and the consequences of new legislation on self-abortion?
We voted against The suggestion at McDonald’s. We thought pig care was an important topic for the company, in part because it could affect consumers’ desire to buy a Big Mac, but the company already had plans to reduce the use of carrying cages in pig production.
We voted for Proposal at Walmart. The company has a large number of female employees, and a change in the law may affect the company’s ability to attract and retain employees. As an investor, we expect companies to assess the risks associated with their workforce and report on how they are approaching this.
The right to vote gives us the opportunity to influence the world’s largest companies. We must seize this opportunity responsibly and in line with the fund’s goal of achieving long-term returns for future generations. It requires plenty of resources, detailed company analysis, clear voting guidelines, and advanced technology. But it’s one of the most important things we do as a responsible investor.
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