Boards may well brace for impact after recent news. Norges Bank Investment Management (NBIM), which is worth KR 10,867bn (£930bn/$1,244bn) and has invested in more than 9,000 companies worldwide, is to begin publishing its voting intentions five days before AGMs.

For companies where NBIM will be voting with the board, seeing the voting intentions in black and white and in the public domain may prove cause for celebration, if not relief. It may prove more stressful for companies where NBIM will be voting in opposition.

News of the policy change came in a Financial Times interview with NBIM’s relatively new chief executive Nicolai Tangen. Interviews granted to high-profile newspapers usually come with an announcement: this time it was voting intentions, a move Tangen described as another step toward greater transparency and destined to make NBIM the “leading fund in the world” based on publication of voting intentions.

There are other funds who reveal their voting intentions in advance, but none can perhaps match the sheer numbers involved in NBIM’s case—up to 12,000 voting decisions a year.

Influential position

According to close observers of fund managers, this does indeed place NBIM in an extremely influential position. Estelle Guichard, a partner at advisory firm SquareWell, the five days’ notice of a voting intention gives time to influence the votes of other investors and time for boards to consider their reaction.

It’s worth bearing in mind too that earlier this year NBIM said it would also begin publishing its “voting rationale”. Together, says Guichard, these steps “will undoubtedly increase the pressure on boards to ensure they address any misalignment with their ESG practices and disclosures well ahead of their general meetings”.

NBIM is not the only fund manager to post its voting intentions in advance of an AGM, but there aren’t many. Others include New York-based Neuberger Berman, which announced it would go public with its voting plans for 2020. CalSTRS, the retirement fund for Californian teachers, and CalPERS, the fund for public sector employees, also go public with their voting intentions.

Elsewhere, investors have increasingly upped the ante on boards by disclosing their voting rationale alongside the way they voted. This includes a bigger subset including Allianz Global Investors, Schroders and UBS Asset Management. Guichard points out BlackRock, the world’s biggest fund manager, made public 54 votes in 2020 compared with just one in 2019 through the firm’s Vote Bulletins. BlackRock’s annual report, published in September, says: “We will keep pushing to drive progress on transparency around stewardship.”

Also on the rise are “collective engagement” efforts with large groups of investors coming together to tackle companies and their boards en masse over particular issues.

Expanding engagement

The evidence shows that investors are expanding the range of their engagements and the methods they choose.

“Investors are continuously enhancing their disclosures on their stewardship activities which disclose not only their behaviour but also the ESG topics they are focusing on with their portfolio companies,” says Guichard.

As for NBIM, it has laid bare its views on everything from executive pay to reporting on sustainability. Earlier this year the fund issued papers on board independence, multiple share classes and shareholder rights.

“A well-qualified board with a high level of independence is better equipped to guide strategy, oversee management and be accountable to shareholders,” NBIM said on independence.

In addition it called for shareholders to have the right to approve new share issues and called for “one share one vote”.

The trend among investors is clear. Boards should prepare for more pressure.