Deepwater Horizon disaster defining moment for CEO of Norway’s wealth fund
Yngve Slyngstad said he told BP to improve its safety and environmental standards at the time, leading to committed ESG investing
Oslo — On his last day as CEO of Norway’s $1.2-trillion sovereign wealth fund, Yngve Slyngstad revealed to his audience the moment he grasped just how crucial responsible ownership will be to the future of global finance.
He zeroed in on the Deepwater Horizon disaster in the Gulf of Mexico in April 2010, which marked the worst environmental catastrophe in US history.
“It kind of dawned on me that ultimately people turn around and say, ‘This company is one thing, but what about the owners of the company?’” Slyngstad said during a virtual seminar on Friday.
In the event, Norway’s wealth fund, the world’s biggest, continued to invest in BP, the company behind the Deepwater Horizon scandal. Back then, Slyngstad said he told BP to improve its safety and environmental standards, as part of an active investment strategy to bring about change from the inside.
During his 12 years running Norway’s wealth fund, Slyngstad has overseen a sea change in the way the investor exercises its ownership. The once “reluctant” owner has now become an “active” investor, he said. That transformation has coincided with the fund’s stunning growth in value since the financial crisis.
Its sheer size means that whatever Norway’s wealth fund says is the next big thing inevitably becomes just that. For Slyngstad, that’s environmental, social and governance (ESG) investing.
“It’s going from kind of a corner of the investment world to very much centre-stage,” he said. “People in my role as heading up an investment management firm will find themselves spending more and more time on this.”
Slyngstad is now moving to London to run the fund’s venture into renewable energy infrastructure, which it plans to account for about 1% of the investing giant’s total portfolio by the end of 2022. His departure has been overshadowed by the drama surrounding his successor Nicolai Tangen, who had to give up the hedge fund he founded to be allowed to step into Slyngstad’s shoes.
The wealth fund, which owns 1.5% of the world’s stocks, invests according to a set of ethical rules that blacklist producers of weapons, tobacco and coal, as well as firms engaged in human rights abuses. The fund has communicated increasingly detailed expectations to the companies it holds, and publishes its voting records so boards and executives can see what it wants from them. From January, the fund will start publishing all its votes ahead of shareholder meetings.
In the coming decades, Slyngstad says companies will need to develop better ways to report on issues such as carbon emissions, and that expectations now directed at companies will increasingly be focused on investors by their ultimate owners.
“That’s an underestimated force,” he said.
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