What the World’s Largest Sovereign Wealth Fund Expects From Companies

Norges Bank Investment Management, or NBIM, manages the Government Pension Fund Global, the Norwegian state fund built from the country’s oil and gas revenues. It is the largest sovereign wealth fund in the world, worth more than two trillion dollars, with holdings in over 7,200 companies and close to 1.5 percent of all listed equity globally. Because of that reach, the standards it sets for the companies it owns carry unusual weight.

NBIM has no legal authority over these companies and does not regulate them in any formal sense. Its influence rests on three things: the scale of its holdings, the votes it casts at shareholder meetings, and the documents in which it states, in advance, what it expects of companies. In combination, these allow the fund to influence corporate behaviour in ways that many companies experience as close to regulation.

This raises a question that recurs in discussions of the fund. When a single shareholder of this size sets detailed expectations for thousands of companies across many jurisdictions, and has the means to act on them, the activity can be read in two ways: as long-term stewardship of its investments, or as a form of private market discipline that carries some of the force of regulation without its formal authority. The distinction matters, and it turns on how the expectations are set, acted on and justified.

 

Why the fund’s scale matters

 

NBIM’s position differs from that of most investors. A typical fund can sell the shares of a company it considers badly run. NBIM, holding a small stake in almost every listed company, cannot easily do so. It is in effect an owner of the market as a whole, and its long-term returns depend on the performance of the entire system rather than on individual stock selection. Investors in this position are sometimes described as universal owners.

This affects how the fund views corporate conduct. When a company in its portfolio damages the environment, weakens a supply chain or undermines confidence in a sector, the resulting cost is not confined to that company. It can affect other holdings, including suppliers, customers and competitors that the fund also owns. For an investor of this breadth, such effects are not external. They reduce the value of the portfolio, which is why NBIM treats environmental, social and governance issues as financial matters rather than ethical ones.

A growing set of expectations

NBIM has published expectations for its portfolio companies since 2008, broadly in line with the UN Sustainable Development Goals. There are now eight expectation documents, covering climate change, nature, human rights, children’s rights, human capital management, tax and transparency, anti-corruption and consumer interests. A separate set of position papers sets out the fund’s views on corporate governance, including board composition and executive remuneration.

These documents were originally framed as guidance and as starting points for dialogue with companies. Over time, the fund has built a more structured process around them. It now assesses companies against the expectations, raises shortcomings in private meetings, supports shareholder proposals, votes against directors where it judges progress inadequate, and, as a final step, divests. The expectations themselves have changed relatively little. The way companies are assessed against them has become more systematic.

What the fund expects

 

The eight documents address different subjects but follow a common pattern. Each is directed primarily at the board, and each frames the issue as a question of long-term financial risk rather than ethics. Four areas account for most of the content.

Climate and nature. NBIM expects companies to manage environmental issues as financial risks. On climate, it asks for net zero ambitions aligned with the Paris Agreement, credible interim targets, and decarbonisation plans based on specific measures. Its nature expectations, consolidated in 2026, ask boards to identify how the business depends on and affects land, freshwater and ocean ecosystems, to disclose those effects, to set targets, and to engage with affected communities, including indigenous and local groups. The fund states that “companies have different starting points and capabilities,” and says it takes a company’s progress into account when it engages.

People. The fund expects companies to respect human rights in line with the UN Guiding Principles, to address children’s rights, and to manage their workforces effectively. It links these issues to operational continuity, a company’s licence to operate and the retention of skilled staff, all of which affect long-term value.

Integrity. Here the fund expects prudent tax policies and transparency about where a company generates economic value, effective anti-corruption measures, and proper management of consumer-related risks. It treats aggressive tax arrangements, corruption exposure and poor consumer outcomes as indicators of weak governance and potential future liabilities.

Board accountability. Across all of these areas, the fund holds the board responsible. Its expectations are addressed to directors rather than to management, and it looks for evidence that the board understands the relevant risks and oversees them. This focus on the board becomes more significant when the expectations are reflected in its voting decisions.

 

How the expectations gain force

 

The expectations carry weight because the fund follows a defined sequence of actions, beginning with assessment and ending, where necessary, with divestment. Much of this work takes place privately, before any public action is taken.

Assessment. In 2024 the fund introduced expectation scores, which assess how closely a company’s disclosures match its requirements. Across the portfolio, companies average around 52 out of 100 on climate and 36 on nature. In 2025 NBIM added a climate performance score, intended to indicate whether companies’ stated commitments are being translated into measurable progress.

Engagement. The fund uses these assessments to prioritise engagement. In 2025 it held about 3,200 meetings with more than 1,300 companies, a substantial share of them concerning governance and sustainability. Most of this work is conducted privately and does not become public.

Voting and divestment. Where engagement does not produce change, the fund can escalate. In 2025 it cast more than 108,000 votes at over 10,800 shareholder meetings, and it has become more willing to vote against the re-election of directors. The final step is divestment. NBIM made 58 risk-based divestments in 2025 and more than 630 since 2012, describing each as a risk-based decision rather than a moral judgement.

For companies, investor expectations increasingly sit between regulation and reputation.

 

A financial rationale

 

NBIM presents this work as financial risk management rather than activism. “Our approach to climate change is financially motivated,” writes Carine Smith Ihenacho, the fund’s chief governance and compliance officer, and the same reasoning is applied across the other themes. The fund reports figures to support the position. Its 2025 Responsible Investment report states that since 2012, risk-based divestments have increased the cumulative return on equity management by 0.68 percentage point, equivalent to about 12 billion kroner, with divestments related to climate change and human rights contributing 0.36 and 0.15 percentage point respectively.

The fund also notes that this contribution varies from year to year. In 2025 it was slightly negative, at minus 0.04 percentage point. NBIM treats risk-based divestments as active investment decisions that affect relative return rather than as a consistent source of outperformance, and frames the overall case in terms of long-term risk management.

This framing has practical significance. It allows the fund to present its expectations as part of its investment process rather than as a separate set of values. That is relevant for an institution that is publicly owned and subject to political scrutiny in Norway, where the use of the fund is regularly debated.

 

Why companies find this difficult

 

For many companies, the difficulty is less a matter of willingness than of capability. The gap lies between the information they currently disclose and the evidence a large investor such as NBIM can use in its own analysis.

Sustainability data is frequently incomplete, particularly on nature, supply chains and scope 3 emissions. Responsibility for disclosure often sits with teams that are distant from strategy and capital allocation, and reporting is spread across several frameworks that are not fully aligned. In many companies, boards continue to treat these matters as reputational rather than financial, which limits their ability to respond to detailed questions from a large shareholder.

The result is a mismatch between a company’s general sustainability reporting and the specific, decision-relevant information its largest investors require. Addressing that mismatch has become a practical test of corporate management.

In practice, this means sustainability teams need to work much more closely with finance, risk, legal, procurement and the board. The issue is not simply whether a company can publish more disclosure. It is whether the company can explain how sustainability-related risks affect its strategy, capital allocation, operations and long-term value.

Stewardship or quiet regulation?

These mechanisms return the discussion to its central question. When one of the world’s largest shareholders sets detailed expectations for thousands of companies across many jurisdictions, and has the means to act on them, the activity can be interpreted as either responsible stewardship or a form of market discipline that functions like regulation, despite having no legislative basis.

There is a clear argument for the stewardship interpretation. NBIM is a long-term owner protecting the value of its holdings and asking boards to manage risks that affect returns. It publishes its expectations, discloses its voting, and operates under a mandate that is debated publicly in Norway. Among large investors, this degree of transparency is uncommon.

There is also a reasonable basis for caution. A single investor, owned by one state, is contributing to governance norms for companies that did not select it and that operate under laws it does not set. Its expectations carry weight partly because it cannot easily sell and because its votes are significant. As other large asset owners adopt similar expectations, the practices of one investor can become a de facto standard.

NBIM is not a regulator in any legal sense. Companies can decline to meet its expectations, accept a lower score and absorb a vote against their directors without legal consequence. The point is narrower. The combination of scale, a structured process and sustained engagement can produce an effect similar to regulation without the formal authority, and that is a feature of how large asset owners now operate.

NBIM is not unique in this respect. Large public pension funds in the United States, Japan and the Netherlands publish their own expectations and vote their shares. NBIM is distinctive mainly in its size, transparency and consistency, which make it the clearest example of a broader change in how corporate standards are set.

 

Implications for companies

 

For boards, the implication is that investor expectations are now a governance issue rather than a communications one. NBIM’s questions concern oversight and risk management, and other large owners are increasingly raising similar questions. A board unable to answer them faces investor pressure even where no regulation has been breached.

For sustainability teams, the requirement is increasingly one of translation. Disclosure alone is no longer sufficient. The task is to connect environmental and social performance to financial risk in a form that investors can use, work that is more closely related to the finance function than to communications.

For the market as a whole, NBIM indicates the direction in which large-scale ownership is moving. Expectations that were once optional are becoming the standard that established companies are assumed to meet, and other large owners are following a similar approach. Whether this is described as stewardship or as quiet regulation, it now operates, for many companies, as both.