The in-house manager for the world's largest sovereign wealth fund has criticized the Principles for Responsible Investment's proposed strategic plan for the period 2021 to 2024.
Before it adopts a new three-year strategic plan, the PRI must run a formal consultation with its signatories. The consultation period for the 2021 to 2024 plan started Oct. 21 and runs until Dec. 4. Signatories to the PRI agree to implement a voluntary set of six ESG principles into investment decision-making.
Norges Bank Investment Management, a founding signatory of the organization, in a letter accompanying its consultation response focused in part on a new purpose statement proposed by the PRI: "Global investors leading for a sustainable future."
NBIM said the new statement "represents a change of direction for the PRI." It said the PRI's new strategy "furthermore emphasizes alignment with real-world outcomes in investment-related decisions. While the term alignment may be subject to interpretation, we believe attributing the impact of companies to investor actions across strategies, asset classes and investor types is challenging. Establishing such a relationship is even more difficult for many minority investors who have only marginal influence on their trustee companies," the letter said.
While NBIM said it appreciated the ambition of the PRI to further develop responsible investment, such a change should "be thoroughly discussed and anchored with the PRI's signatories." Under the PRI's articles of association, signatories have the right to vote on any amendment to the six principles.
"We believe that substantial strategic developments which may represent a de facto amendment of the PRI's articles of association or a new principle should be treated as such, and therefore be subject to a signatory vote," the letter said.
NBIM also focused on the format in which the PRI's proposed strategy was presented — a "high-level document with bullet-point overviews of topics, priorities and input from signatories … We find the format chosen by the PRI lacking in relevant context and therefore at times challenging to focus on," the letter said.
Some proposals would "also benefit from more context and discussion" than the document presents, NBIM said.
However, NBIM was supportive of a number of initiatives presented by the PRI, including an ambition to increase contribution and collaboration between academics and investors. "Exchanging knowledge with academics can benefit investors, and research could also help inform the PRI's strategy and policies. We are, for example, interested in understanding how issues related to sustainability may impact the economy and the companies we invest in, and thus long-term risk and return," the letter said, citing NBIM's recently announced financial support for three new research projects to examine how ownership structures affect companies' governance and performance. "Such academic studies promise to shed more light on the effects of investors on companies."
NBIM's letter was signed by Carine Smith Ihenacho, chief governance and compliance officer, and Wilhelm Mohn, head of sustainability.
A statement by the PRI said: "NBIM is one of hundreds of signatories who have participated in our strategy consultation and we welcome their feedback. The PRI board will be reviewing all feedback before the draft strategy is finalized."
NBIM is the in-house manager for the 10.86 trillion Norwegian kroner ($1.18 trillion) Government Pension Fund Global, Oslo.
Separately, NBIM CEO Nicolai Tangen tested positive for COVID-19 on Thursday.
Mr. Tangen said in a post on his LinkedIn profile that he took a test "after feeling a bit under the weather, but my symptoms are mild." He is isolating and working from his apartment in Oslo, with colleagues who have been in meetings with him also put in quarantine, he said.