For the Norwegian market, KLP engages in proactive engagements to improve ESG performance (e.g. encouraging reporting to CDP or membership in RE100). KLP also engages with Norwegian companies on the basis of controversies - often reported on more extensively in the Norwegian media than through service provider platforms. For these engagement, KLP defines the goals and process in conjunction with the relevant portfolio managers. KLP is a long-term investor in the Norwegian market, and as such, can engage with a single firm over many years.
For portfolio companies outside the Norwegian market, KLP primarily learns of potential violations of international norms through service provider screening. KLP prioritizes engagement mainly based on the severity of the alleged violation. KLP's service provider engages on KLP's behalf, but KLP also becomes directly involved when practical and in cases where divestment may be indicated. KLP may also engage in cases directly on our own initiative on thematic issues that receive minimal coverage from service providers. If the engagement both involves a violation of the KLP guidelines for responsible investment and we see no realistic expectation of progress, then divestment will be recommended. An internal committee comprised of members of the asset owner and the asset manager make the final decision on divestment.