Norway’s Government Pension Fund Global, the largest sovereign wealth fund worldwide, has a variety of tools for ensuring that the companies in which it invests uphold the Fund’s long-term financial interests.
Norges Bank Investment Management (NBIM), which manages the Fund’s assets, publishes “expectations documents” that communicate the Fund’s investment priorities and standards. One such document focuses on anti-corruption. It explains how corruption undermines long-term business performance and economic efficiency, and it provides three business integrity pillars for investees to follow: (i) establish clear policies on anti-corruption, (ii) integrate anti-corruption into business operations, and (iii) report and engage on anti-corruption programming. Pursuant to these established expectations, NBIM actively monitors companies to ensure that their practices align with the Fund’s investment agenda, and may choose to invest, divest, or engage accordingly.
Moreover, the Council on Ethics, which functions independently from NBIM, also monitors the Fund’s portfolio and may recommend that NBIM closely observe or exclude a particular company until corruption risks have been addressed. When investigating a company, the Council on Ethics monitors more than 80,000 media sources in 20 different languages, examines court documents, and requests information from the company in order to determine whether there is an unacceptable risk that the company contributes to, or is responsible for, gross corruption or other serious financial crime. Although NBIM is not obliged to follow the advice of the Council on Ethics, it tends to follow the Council’s recommendations.
Through its expectations documents, management practices, and Council on Ethics, Norway’s Government Pension Fund Global exemplifies various ways that institutional investors can incentivize integrity-driven corporate practices.
Source: Norges Bank Investment Management (2023), “Anti-corruption: Expectations towards companies”, https://www.nbim.no/contentassets/9af1e01021a642b3aa162d140dd0069a/anti-corruption.pdf; U4 Anti- Corruption Resource Centre (2022), “Investigating the ethics of investments”, https://www.u4.no/publications/investigating-the-ethics-of- investments.pdf; Government of Norway (2021), “Guidelines for Observation and Exclusion of companies from the Government Pension Fund Global (GPFG)”, https://www.regjeringen.no/contentassets/9d68c55c272c41e99f0bf45d24397d8c/2022.09.05_gpfg_guidelines_observation_exclusion.pdf
