Launch of "Principles for Responsible Investment"
Address by Knut N. Kjær, Executive Director, Norges Bank Investment Management
New York Stock Exchange, 27 April 2006.
Dear Secretary-General, dear hosts at the stock exchange, dear fellow investment professionals.
A year ago, we were delighted by the Secretary-General's initiative. Today, we are very satisfied with the outcome. These principles are aspirational enough to provide direction for the future, though realistic enough to have the potential of becoming the norm for investors globally.
I am here on behalf of Norway's Government Pension Fund, better known perhaps as the Petroleum Fund. While petroleum extraction in Norway may last a generation or two, the purpose of the fund is to smooth the spending of this wealth - in principle over all future generations. The long-term horizon combined with the size of the fund makes the investment return very dependent on the functioning of global capital markets and the governance of companies in many countries.
The Norwegian Parliament has established ethical guidelines for the Fund. The financial wealth shall be managed to generate a sound return in the long term, acknowledging that the return is contingent on sustainable development in an economic, environmental and social sense. The financial interests of the Fund shall be strengthened by means of corporate governance activities.
As investors, our mission is to safeguard and grow financial wealth for future generations. I will mention five issues linked to this:
First, we should acknowledge that our long-tem financial interests are as connected with global prosperity as with each and every company in which we invest.
Second, we should acknowledge that the prospects for global prosperity are intertwined with other societal goals - peace, sustainable development, respect for the law, open and well-regulated markets.
Third, while there is a great deal that investors obviously cannot do, we must start at the other end and determine what we can sensibly do.
Fourth, in the long run, we cannot only be passive owners. The Norwegian government, like other fund owners, screens out companies that risk committing gross human rights violations. However, such screening can only play a limited role for such a large fund. If we want to bring about change in markets and firms, we must become engaged as owners.
Fifth, as large, global investors, we must recognise our common agenda and deepen our collaboration.
That is where the Principles for Responsible Investment come in.
Secretary-General, your Global Compact initiative has been a huge success. Not only in terms of the impressive number of signatories, but because it now provides businesses with a common platform for discussions on responsibility. It has, in fact, become a norm. In our case, the principles for corporate governance are partly based on the Global Compact.
The Principles for Responsible Investment also have the potential of becoming the norm for investors, framing our discussion, supporting our collaboration, and - most importantly - ensuring healthy investment return in the long term. That is the main asset of this enterprise.
Pressetelefon: 21 49 09 30