Norway's sovereign wealth fund primarily seeks to have an impact by maintaining a close exchange with the companies and in this way achieving change in the companies in which it is invested. „We have influence by challenging companies on the basis of their transition plans to transform from brown to green companies in line with our action plan“, Alexis Wegerich, Head of ESG Analytics at Norges Bank Investment Management (NBIM), the company that manages the sovereign wealth fund, tells Börsen-Zeitung. „That is different from taking just 0-or-1-decisions, that means being invested or non invested“, adds the ESG specialist, summing up: "We have impact through engagement."

Wegerich clarifies that NBIM does not have a specific impact investing mandate. Rather, he says, the mandate is to achieve the highest financial return. „But since we are such a long term investor we believe that over the long term a good return for the fund depends on sustainable economic environmental social developments“, Wegerich underlines. Therefore, NBIM clearly has responsible investment anchored but does not have a dedicated impact mandate.

NBIM is one of the largest international investors. "We have a good reputation in the markets and therefore a good access to company management boards. And through access, he says, you can try to achieve changes in the companies. The goal, Wegerich unterlines, is „to vote all our shares“ – „and we have done so in more than 97% of all cases.“ However, the investment management company votes virtually. „We do not show up at the General Assembly and held speeches,“ states Wegerich. Rather, he says, NBIM engages in dialogues with companies throughout the year.

On behalf of the company, usually the top management or members of the board plus Investor Relations plus sustainability experts are participating in the meetings, on behalf of our side it is the equity active portfolio manager and a specific ESG specialist depending on the issue. “In the first half of this year we have had already 1675 meetings, so quite a bit. In more than 1000 meetings ESG was an agenda point.“

Wegerich emphasises, "We are a very transparent fund." NBIM, he says, has expectation documents on specific sustainability issues, outlining what the fund expects from companies for example on climate or consumer interests. NBIM has a look on how are these targets integrated in strategy and how do companies manage the risks. „And then we can analyze and monitor companies towards our expectations.“

The Head of ESG Analytics says the fund is constantly monitoring the portfolio for ESG risks and has a range of complementary tools to address such risks, in particular for small investments. If NBIM would feel it is an undue financial risk, the fund would divest. “But first we have a dialogue with the management, and often we can achieve changes“, Wegerich underlines. The main option for escalation is voting rather than divesting. For example: The funds voted against the board of Berkshire Hathaway. Because neither the company had an emission reduction target nor it disclosed the emissions. That was „simply not good enough“. Wegerich is convinced: „Engagement can work pretty well.“

As for the availability of non-financial information, Wegerich emphasises that the main source of ESG data is company reporting. There are alternative sets of data such as from satellite pictures, but the main source is corporate reporting. NBIM also uses some AI techniques to run over public reporting documents of companies, where there are a lot data is hiding in the text, to extract data to fulfil our needs. There are a lot of data start-ups using AI. „In our days, there is a lot going on to better extract data from corporate reporting“, the ESG specialist reports. What is crucial is to have a consolidation of reporting standards. „Since years we advocate clearer and more coherent reporting standards“, he says. These standards will help to get better data.