Proxy Voting at Norges: A “Must” Listen
Proxy Voting at Norges is vital to shareholders worldwide since they own about 1.5% of most equities. Today’s investors increasingly engage with corporations on ESG risks through various avenues like management interactions, voting, and divestment. Norway’s sovereign wealth fund, a significant stakeholder in global companies with $1.7T in assets, exemplifies this trend. They announce their proxy votes and rationale for those votes in advance five days before the date of most meetings. Now, that information is readily available through Bloomberg (query {ni preproxy <Go>}) as well as on the Norges website!
Tune in to ESG Currents as Rob Du Boff, senior ESG analyst, talks about ownership and responsible investment activities with Carine Smith Ihenacho, Chief Governance and Compliance Officer at Norges Bank Investment Management. Congratulations to Bradley August, who has worked for years to make this happen.
One thing I love about their disclosures is that Norges posts how and why they voted as they did. That’s good corporate governance.
Following Norges’ pre-disclosure to vote against a proposal, opposition by other shareholders increases by approximately 2.7%. Researchers also document an increase of 3.6% in other shareholders supporting shareholder proposals after
Norges has pre-disclosed its support. Compare that to ISS (12%) and Glass Lewis (6.5%). Note that these figures are beyond the impact of Norges’ director votes, which average about 1.5%. See Leading by Example: Can One Universal Shareholder’s Voting Pre-Disclosure Influence Voting Outcomes?
Think about it. Norges owns 1.5% of most companies. If they support a shareholder proposal, researchers found that the vote in favor of that proposal goes up not just by 1.5% (reflecting Norges’ shares) but by 5.1% (1.5% + 3.6%) before Bloomberg started publicizing such votes. Announcing in advance with the rationale tiples the voting impact of Norges.
Now that anyone with a Bloomberg terminal can receive an alert, Norges’s proxy voting influence should increase even more, especially once all the possible bugs are worked out, and more investors are aware of these pre-disclosed votes as a valuable source of information. Eventually, I expect proxy advisors like iconikapp.com may allow users to choose Norges votes as one of their defaults for various topics, such as when voting for directors.
For almost two decades, I have discussed the benefits of announcing votes in advance with leaders at many funds. The most frequent response to why they don’t post their votes is that they fear the phone calls and emails they will get from companies wanting them to change their votes. Ms. Ihinacho noted that announcing their votes has not significantly increased such inquiries.
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Leading by Example: Proxy Pre-Disclosures Influence Outcomes
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