Norway’s wealth fund gets tough on firms over tax transparency

Oslo — Norway’s $1.3-trillion wealth fund, the world’s largest, has, for the first time, pulled investments from companies because of their tax policies, the fund$1.3-trillion wealth funds CEO has said, adding more such moves are likely in future.

One of the world’s largest investors, the fund holds stakes in about 9,200 companies globally, owning 1.5% of all listed stocks. It has set the pace on a host of issues in the environmental, social and governance (ESG) field.

Nicolai Tangen, who took over the fund in September, said it had sold out of seven companies in 2020 due to “aggressive tax planning and cases in which companies do not give information about where, and how, they pay tax.”

He said the companies were small, but declined to give their names and business sectors so as not to give the impression the fund has a blacklist of companies regarding their ESG practices.

“You can expect more activity in this area,” he said.

In 2016, Norwegian lawmakers ordered the fund to be more involved in global efforts to combat tax havens.

As a result, in 2017, the fund issued its first “expectation document” on tax transparency, a document it distributes to the boards of all the companies it is invested in about what the fund wants them to do on a particular issue, in this case, tax transparency.

The fund will revise that expectation document and publish an update in the spring, Tangen said. He did not say what specific topics could be updated in the document.

Overall, he said, companies should pay tax where the value-creation takes place. “How they disclose their tax situation and the level of transparency they have [is important],” he said.

In Europe, global tech companies, in particular, have come under fire for channeling profits through low tax countries and paying little tax in some states where they make vast revenues.

Reuters