Norway's oil fund is to become a more active investor by helping pick directors at companies in which it has significant stakes in a big shift of strategy at the world's largest sovereign wealth fund.
Yngve Slyngstad, chief executive of Norges Bank Investment Management as the fund is known, is joining the nomination committee of Swedish truckmaker Volvo in a move that will see the oil fund formally participate in selecting directors for the first time.
"I think active is a fair description. We think it's the responsibility of the larger investors to be more involved in what in the UK is referred to as stewardship and have a dialogue not just with the CEO and CFO but also the chairman of the board," Mr Slyngstad told the Financial Times.
Norway's oil fund with $720bn in assets is one of the biggest investors in the world and on average owns 2.5 per cent of every European listed company. It is looking to become more active over the composition of boards at companies where it owns about 5 per cent or more and its stake is worth at least $1bn.
Mr Slyngstad said in the UK its holdings of that size include Tesco, Prudential and BG. "As a top-five investor we would expect to have that dialogue [with the chairman]," he said.
The oil fund's move comes amid a growing debate about how great a role shareholders should play in supervising companies.
"The reality is that we have found ourselves among the largest shareholders in a handful of companies . . . We are supporting the boards in their role to create long-term shareholder value. That doesn't mean we are in the bracket of activist investors or single-issue investors," Mr Slyngstad added.
The oil fund, whose biggest holdings include Nestlé, Royal Dutch Shell, HSBC and Apple, still sees itself as a financial rather than strategic investor. It also has a 9 per cent stake in BlackRock, the world's largest asset manager, but Mr Slyngstad said its focus "for now" would be on Europe.
Mr Slyngstad said the fund had looked at the Swedish model of the largest investors taking an active part in board nomination but that perhaps the biggest spur for the shift came from the Kay Review in the UK on encouraging long-term decision-making.
Some of its biggest stakes by percentage terms are Finnish paper makers Stora Enso and UPM-Kymmene, where the fund will seek to join the nomination committees in the future.
The fund also said it would not be changing its policy of never commenting on individual companies in public. It is barred from owning more than 10 per cent in any one company.