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Norwegian Government Pension Fund Norway (Norwegian Ministry of Finance and Folketrygdfondet)

PRI reporting framework 2020

You are in Strategy and Governance » Objectives and strategies

Objectives and strategies

SG 05. RI goals and objectives

05.1. Indicate if and how frequently your organisation sets and reviews objectives for its responsible investment activities.

05.2. Additional information. [Optional]

Folketrygdfondet's board of directors reviews our responsible investment strategy annually.


SG 06. Main goals/objectives this year

06.1. List the main responsible investment objectives that your organisation set for the reporting year.

Responsible investment processes

Key performance indicator

          Completion of annual ESG training plan
        

Progress achieved

Folketrygdfondet has an internal ESG training plan that is updated annually. All sessions planned for 2019 were completed. In addition, ESG is a fixed agenda item for morning meetings for the front office, such that portfolio managers (equity and fixed income) remain up to date on developments relevant to the portfolio on an ongoing basis.

Key performance indicator

          All portfolio managers understand and demonstrate Folketrygdfondet's ownership role and philosophy.
        

Progress achieved

ESG engagement is a core responsibility for portfolio managers at Folketrygdfondet and a key element of our investment philosophy. The majority of this training occurs through "learning by doing." To give a couple examples of how we provide training on ESG engagement internally:

  • Folketrygdfondet sets the engagement priorities for the equity portfolio twice annually, in collaboration with the director of equities, the portfolio manager responsible for following each sector, and the dedicated ESG resource. We thereby bring together industry and company-specific knowledge, ESG competence, and an understanding of Folketrygdfondet's ownership role together in determining our focus for engagement over the next half year.
  • Folketrygdfondet conducts internal pre-meetings before meeting with the leadership team or the board chair in portfolio companies. Each pre-meeting includes a discussion of any ESG items that should be included in the agenda. 

For new portfolio managers, Folketrygdfondet has a mentor arrangement whereby they are matched with a more experienced colleague. This training includes learning how Folketrygdfondet engages with portfolio companies on ESG as well as more traditional financial issues.

Key performance indicator

          Report on and increase engagement with Nordic (non-Norwegian) portfolio companies
        

Progress achieved

For the first time, we reported on dialogue with Nordic companies in Folketrygdfondet's ownership report. The aim is to present Folketrygdfondet’s active ownership in the Nordic region. Although our ownership interest is lower in the Nordics than in Norway, we have found that Nordic companies place a high priority on engaging in dialogue with us.

In 2019, Folketrygdfondet held 153 dialogue meetings with a total of 52 companies listed on the Oslo Stock Exchange, in addition to 78 meetings with 60 companies listed in Denmark, Sweden and Finland. The topics covered at these meetings included climate, strategy, capital structure and financial targets[m1] . The 2019 climate risk dialogue encompassed companies in the transport, real estate and building and construction sectors. Anti-money laundering measures were an important topic in discussions with the banking sector, driven particularly by revelations linked to the activities of Nordic banks in the Baltics.

Financial performance of investments

Key performance indicator

          Excess returns
        

Progress achieved

In 2019, Folketrygdfondet achieved returns 0.4% in excess of the benchmark index. We are unable to isolate the specific contribution attributable to consideration of ESG factors. It is nevertheless an integral part of our investment philosophy.

ESG characteristics of investments

Key performance indicator

          Excess returns
        

Progress achieved

Turning to the equity portfolio specifically, in 2019, Folketrygdfondet achieved returns 0.4% in excess of the benchmark index. We are, however, unable to isolate the specific contribution attributable to over- or underweighting portfolio companies based on ESG factors, as we assess ESG risk in the same manner as any other type of financial risk.

Other activities

Key performance indicator

          Active participation in Norsif
        

Progress achieved

In 2019, Folketrygdfondet was represented on the Norsif board and on the nomination committee.

06.2. Additional information.


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