This Blog Essay site devotes every February to a series of integrated but short essays on a single theme. The Ruminations Series in 2009 produced a series of aphoristic (ἀφορισμός) essays, meant to provoke thought rather than explain it. The hope was that, built up on each other, the series would provide a matrix of thoughts that together might lead the reader in new directions. Ruminations continue to be produced form time to time. For 2010, this site introduced a new series--Business and Human Rights. The series took as its starting point the issues and questions raised by John Ruggie, the United Nations Special Representative of the Secretary-General (SRSG) on business and human rights, in a global online forum.
For 2011, this site introduces a new series of integrated essays--Developing a Coherent Transnational Jurisprudence of Ethical Investing: The Norwegian Sovereign Wealth Fund Ethics Council Model. The object of this series to to consider the work of the Ethics Council of the Norwegian Sovereign Wealth Fund. The thesis of this series is this: The Norwegian Sovereign Wealth Fund (NSWF ) investment program is grounded in the application of a set of Ethical Guidelines adopted by the Storting (the Norwegian Legislature) and enforced through an Ethics Council charged with determining whether a company should be excluded from investment by the NSWF. The work of the Ethics Council has produced the beginnings of a coherent jurisprudence of ethics for corporate investment. That jurisprudence may contribute significantly both to the development of transnational social norm standards and affect the way domestic corporate law is understood. This is Part XXVI of the series.
From NBIM submits shareholder resolutions to four US companies 2009.
The Ethics Guidelines provide only one part of the complex governance and regulatory structure of the NSWF's responsible investment framework.
The term «responsible investment practice» has begun to take hold as a recognised and applied concept in the global investment community. It springs historically speaking from the idea that business has an ethical and social responsibility that extends beyond directives to comply with laws and regulations.At the same time the debate about what constitutes responsible investment practice has gradually moved back to the core of investment management: managing capital with the aim of achieving the highest possible financial return within an acceptable risk, in line with shareholders" interests. There has been a move away from a purely philanthropic or ethical point of view to greater awareness of self-interest. From a perspective of ensuring a long-term return on capital values, many investors consider the following questions relevant: What ensures the companies" assets in the long run? What risk factors must a broadly diversified, long-term investor consider? Are there sufficient converging interests between owners and managers of the capital? Should companies demonstrate that they take due account of environmental and social factors, so as to convince investors that they create value over time? (Ministry of Finance, Report No. 10 (2009-2010) The Management of the Government Pension Fund in 2009, Section 10.1).
“We are increasingly attaching importance to Norges Bank’s active ownership,” says Minister of Finance Sigbjørn Johnsen. The new guidelines for Norges Bank include a new, ambitious requirement of generally integrating considerations of good corporate governance and environmental and social issues into investment activities. This reflects international developments, says the Minister of Finance.
Norges Bank participates in a variety of formal and informal initiatives in collaboration with other investors. The new guidelines emphasise the importance of this by stipulating that the bank actively contribute to development of good international standards within responsible investment practice and exercise of ownership rights. New requirements have also been defined regarding transparency and reporting in Norges Bank. (Norway, Ministry of Finance, New guidelines for responsible investment practices in the Government Pension Fund Global (GPFG) Press release, 02.03.2010, No.: 11/2010. )
An important prerequisite for influencing companies to change their behaviour is that such a change is also in the companies" interest, if not the results may soon become arbitrary. Where it is difficult to find a solution in isolation at the company level, a broader industry approach may be relevant. An example of successful ownership work in this context is the GPFG"s initiative in India which contributed to a new industry standard for combating child labour.The most appropriate form of sustainable, long-term and predictable solutions to global problems will often be through regulation. In this case, the GPFG will primarily be interested in influencing global authorities in the direction of integrating the external effects with the economy, either directly or in partnership with portfolio companies and other investors. Work on climate change or regulation of the financial markets so that risk-taking is more in line with long-term interests are good examples of issues where global solutions are most appropriate. (Ministry of Finance, Report No. 10 (2009-2010) The Management of the Government Pension Fund in 2009, Section 11.4).
The Ministry of Finance and the Council on Ethics for the GPFG take part in a project coordinated by the UN Global Compact, where the goal is to develop a set of guidelines that provide guidance for responsible corporate and investment practice in conflict areas. Such guidelines are hoped to provide investors and companies a greater degree of insight into each other"s experiences and perspectives, contribute to better and more efficient use of suitable tools when companies operate in such areas, as well as raise awareness and clarity about what is acceptable, responsible behaviour. (Ministry of Finance, Report No. 10 (2009-2010) The Management of the Government Pension Fund in 2009, Section 10.3).