World's Largest Sovereign Fund Vows More Transparency on Shareholder Votes

On Wednesday, the World's Largest Wealth Fund With $1 trillion Worth of Assets Said it Will Make the Vote at Shareholder Meetings More Transparent

Norway's sovereign wealth fund, the world's largest with $1 trillion worth of assets, will make its votes at shareholder meetings more transparent by explaining any opposition to board recommendations, it said on Wednesday.

The fund, which invests around 70 percent of its portfolio in the stock market, has stakes in some 9,200 companies, owning 1.5 percent of all globally listed shares. In most cases, Norges Bank Investment Management (NBIM) will back a board's proposals at a meeting of shareholders, but not always, it said. "It is particularly relevant for companies and the general public to understand why we in some cases vote against the board," Chief Corporate Governance Officer Carine Smith Ihenacho said.

The Release of Records

Norges Bank
Norges Bank (Representational Image) Wikimedia Commons

The fund already releases records showing which proposals it backed or rejected, but only rarely has it explained its actions. From Wednesday onwards, that will change. "We will publish the rationale in our voting solution one day after the shareholder meeting," NBIM said.

To help manage expectations, it also released four position papers on Wednesday to clarify its views on board independence, multiple share classes, shareholder rights in equity issuance, and companies' related-party transactions. Ihenacho also called for more efficient voting processes at many firms.

"We see that in several markets, there are still manual voting processes, several layers of intermediaries, and a lack of electronic solutions," she said. "We depend on issuers, investors, business participants, and regulators cooperating to make relevant information available, propose improvements, develop good electronic voting solutions, and modernize frameworks," she added.