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Response to the Securities and Exchange Commission’s concept release on business and financial disclosure required by Regulation S-K

Letter sent to the Securities and Exchange Commission, 15 July 2016

15 July 2016

Norges Bank Investment Management welcomes the opportunity to provide comments to the Commission specifically on the disclosure of information relating to sustainability and public policy matters.

Norges Bank Investment Management is the investment management division of the Norwegian Central Bank and is responsible for investing the Norwegian Government Pension Fund Global. As of 31 March 2016, the fund was invested in 856 billion USD of assets globally, of which approximately 185 billion USD was invested in U.S. equities.

Norges Bank Investment Management expects companies to identify, address, and disclose material sustainability risks and opportunities they face. How companies manage such risks and capitalize on opportunities can drive their long-term returns, while transparency on such risks and opportunities can be useful to investors in their analysis of how relevant sustainability issues may affect the financial performance and prospects of their portfolio companies. We believe there are specific sustainability and public policy issues that are important for informed voting and investment decisions. Some important topics include (i) environmental issues, including reporting on climate risks and emissions, (ii) social and employee matters, (iii) respect for human rights, and (iv) anti-corruption and bribery matters. If the Commission were to adopt specific disclosure requirements involving sustainability or public policy issues, the Commission could use a balanced, sector-based approach to elicit meaningful disclosure on these important issues.

We reiterate our view that the board of directors has the overall responsibility for the company‚Äôs strategy, execution, and reporting, including the identification and disclosure of material sustainability factors. Under the terms used in the concept release, we consider a principles-based approach underpinned by materiality to be the most appropriate for creating a disclosure framework flexible enough to address evolving issues. We nevertheless see a need for detailed guidance on what items such reporting could include and believe the Commission can provide further guidance to companies in their assessment of material risks specific to the sectors they are operating in. We also highlight the existing reporting frameworks of initiatives such as the Sustainable Accounting Standards Board (SASB) and Global Reporting Initiative (GRI), which provide sector-based guidance to companies. We support the development of improved sustainability and corporate governance standards and practices at the national and market level, and their alignment at an international level.

You can find our response to the specific questions set out in the concept release in the appendix.


Yours sincerely,

Petter Johnsen
CIO Equity Strategies                                                                                     

Basak Yeltekin
Senior Analyst Ownership Strategies

Download the submission, with appendix (PDF)