News International review Investigation

A $1 Trillion Fund Cracks Down on Corruption in Its Portfolio

"India is one of those markets where you should expect that we will continue to increase our investments over time, significantly," Slyngstad, said.
Yngve Slyngstad, chief executive officer of Norges Bank Investment Fund, arrives for a news conference in Oslo, Norway, on Wednesday, Oct. 29, 2014. Source: Krister Soerboe/Bloomberg.

This material belongs to: Bloomberg.

The world’s biggest sovereign wealth fund signaled it will get tougher in weeding out companies from its portfolio that don’t live up to a set of anti-corruption standards it has set.

Chief Executive Officer Yngve Slyngstad said “data on corporate governance and sustainability can influence our investment decisions. Our goal is to reduce the fund’s risk. We want companies to move from words to numbers so that we can get a better understanding of financial opportunities and risks.”

Norway’s $1 trillion fund owns 1.4 percent of all listed companies and actively pushes for higher environmental, social and governance standards for its vast portfolio. “We expect all companies we are invested in to have effective anti-corruption measures in place,” Slyngstad said.

The investor is becoming increasingly activist in its approach, 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. Because the fund largely follows indexes when it invests, the ability to influence companies by voting is key to its strategy.

Last year, the fund called for more transparency from companies on taxes and said that these should be paid where the economic value is generated. It also proposed reining in long-term incentive packages for chief executive officers and urged boards to be more transparent on executive pay.

On Tuesday, the fund said it expects companies to establish clear policies on anti-corruption, integrate measures into their operations and report and engage on anti-corruption programs. It also said it voted at more than 11,084 shareholder meetings, and earmarked 67.8 billion kroner as environmental investments that returned 21.7 percent in the year.