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Responsible investment 2015

Responsible investment is an important part of Norges Bank’s mandate and an integral part of the investment process. In this report, we review the work on responsible investment in 2015.

In brief

Standard setting

We aim to contribute to the development of market practices that will benefit the long-term interest of the fund. These include standards for corporate governance, sustainable business practices and the functioning of financial markets. Our principles and expectations build on internationally recognised standards. Research increases understanding of factors that can affect future returns.

Ownership

We are an active owner and use our voting rights to safeguard the fund’s investments. This includes voting to promote sustainable development and good corporate governance. As a large, long-term investor, we engage directly with companies’ board and management.

Risk management

We monitor and analyse risks relating to environmental, social and governance issues. Risk assessments may lead to adjustments to the portfolio. We follow up selected issues across companies in the portfolio and emphasise the development of high-quality data.

Children's rights

The long-term legitimacy of sectors and markets may in some cases be dependent on operations and products that are ethically acceptable. We publish expectations, analyse and engage with companies. We expect companies to respect children’s rights in line with the United Nations Guiding Principles and incorporate children’s rights in strategic planning, risk management and reporting. We have been assessing companies with activities or supply chains in sectors with a high risk of child labour since 2008.

Water management

How companies manage water risks and capitalise on opportunities, may drive long-term returns for us as a shareholder. Externalities from unsustainable water use may in itself present a risk to the portfolio’s long-term value. We publish expectations, analyse and engage with companies. We expect companies to incorporate potential water risks in strategic planning, risk management and reporting. We have been assessing companies exposed to water risk since 2010.

Climate change

Climate outcomes may affect company and portfolio return over time. Climate change may also give rise to business opportunities. We publish expectations, analyse and engage with companies. We expect companies to plan for relevant climate scenarios, and incorporate potential climate risks in strategic planning, risk management and reporting. We have been assessing companies exposed to climate risk since 2010.