Norges Bank Investment Management (NBIM), which is the asset manager for the Norwegian Government Pension Fund-Global (GPF-G), has added water management as a new focus area. This will increase the focus areas to six, as the NBIM already has a broad “active ownership” strategy that includes various environmental issues.
As Gordon and I argue in a forthcoming paper, the GPF-G challenges conventional boundaries between ‘private’ investment and ‘public’ responsibility for global social and environmental standards. As such, it is both an instrument of long-term national welfare and an expression of Norway’s commitment to global justice. This comes through clearly in in the latest quarterly report:
“NBIM has supported corporate strategies to reduce CO2 emissions and promote energy efficiency, in addition to measures to improve reporting and enhance transparency relating to corporate impact on climate change.”
These same principles will now be applied to water. The objective is to improve corporate governance with respect to water management. Significantly, this policy is seen by the NBIM as a way to secure financial, rather than social, benefits.
“A global shortage of water represents a financial risk to the fund…Shortcomings in companies’ water management reporting makes it difficult to assess the degree of risk exposure resulting from their own operations or their supply chains.”
The NBIM will soon publish a document outlining its expectations for companies’ water management (and environmental) policies. I look forward to reading it.
Noble and intriguing. The economic rationale seems a bit farfetched though. Though it does not look like Norway is going to sell all of its stock in sinners, just vote. Since it will always be a minority shareholder, that vote is unlikely to change anything. Also, should the economic rationale hold, it will only do so in the long term. Small stakes allow a relatively opportunistic exist and, in a way an opportunity to a sort of free ride: others with less mobile stakes will have less opportunity to exit opportunistically. Noble and still efficient. Clever.
Yeah, GPF-G’s policy kind of reminds me of CalPERS activist approach. I guess if you own 1% of the global stock market, you have the capacity to make change on various levels. Thanks for the comment.