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Norway wealth fund steps up voting against CEO pay packages

Oslo

NORWAY'S US$1 trillion wealth fund, the biggest of its kind, increased its votes against executive pay packages last year and said it engaged with companies in the auto sector on risks from the use of cobalt.

The fund had close to 1,500 "dialogues" with companies last year, but also divested 30 due to governance risks and excluded 13 based on ethical guidelines. It voted against 7.2 per cent of resolutions on executive remuneration, up from 6.9 per cent in 2017.

The fund met with 14 companies in the auto sector, including BMW AG, Toyota Motor Corp and Volkswagen AG, to discuss human rights concerns related to cobalt use.

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"Some new issues are emerging from the transition to a low-carbon economy," said Carine Smith Ihenacho, the fund's chief corporate governance officer. "We contacted companies to understand their low-emissions plans and how they are managing the risk of human rights violations in their supply chain." The fund met with 24 "global banks" to look over their climate disclosures and to see if they're equipped for the "transition to a low-carbon economy" and talked to banks in Malaysia, Indonesia and Latin America about lending policies and deforestation.

It voted at 11,287 shareholder meetings last year. It had 56.7 billion kroner (S$9 billion) earmarked for environmental investments, which lost 8.3 per cent in the year.

Norway's fund is becoming increasingly activist in its approach to investing, with a particular focus on corporate governance issues and voting. It has attacked excessive CEO pay and refuses to invest in companies that fail to live up to its environmental and ethical standards.

Last year, the fund called for more companies to establish clear policies on anti-corruption, integrate measures into their operations and report and engage on anti-corruption programmes. It also set out its expectations towards companies on the sustainable use of oceans, including seas and marine resources. BLOOMBERG