2023 was a year which was impacted by war, climate and inflation.

It was also the year when artificial intelligence started to make an impact.

Climate risk is financial risk.

The transition to net zero is really, really important.

In 2023, we saw floods, we saw harvests being destroyed, and we saw people actually unable to get to work because of all these problems.

Changes now happen really, really quickly and we need to be ahead of the curve.

It's important that companies understand that we are a long term and predictable owner.

So this year we're taking transparency to a new level.

Transparency is key both for building trust but also for achieving better outcomes.

So in 2023, we were recognized as the most transparent fund in the world, and we achieved the highest results in the category of responsible investment.

Throughout the year, we took a firm stance on important issues such as board diversity and executive pay.

And for the first time we submitted our own climate related shareholder proposals.

However, there's still a long way to go for all the companies in our portfolio to have net zero 2050 targets.

And we urge all the companies not only to have targets but also clear transition plans.

We want engagement, discussions and input from all of our stakeholders.

That helps us improve so we can continue to be a leading responsible investor.

In 2023 we were even more transparent than before.

As investors, we make a living from information and data is key to absolutely everything we do.

From the analysis and the investments to the companies we speak with, to our view of the climate risk and the portfolio.

Now we use even more advanced methods.

Artificial intelligence or machine learning can help us understand the sustainability disclosures of companies and base our work on data that didn't even exist five years ago.

Our Responsible Investment report sums up our ownership work in 2023 in detail

The meetings we had, the boards we met with, the progress of our Climate Action Plan.

But now let's hear from our great colleagues and topic experts more about what we did and why we did it.

So we were one of the first investors to an extent go and speak out loud about responsible AI.

So why did we develop the view on this topic?

Companies should really embrace the opportunities of AI, but they need to do so in a responsible way that also takes care of the risk.

Yes, definitely, and I think one of the big conversation is our understanding is that this will have a huge impact on the next years to come.

So it makes sense for us to come in early, give our view on what we think responsible use actually means at this current point in time.

Absolutely.

So we took the approach of trying to develop for us as an investor, what is most relevant for us to come out and say to our portfolio companies,

and we really want to make sure that we reflect the best practice, that we stay slightly aspirational, but also something that is achievable for the companies we're invested in.

So we wanted to find out what are the best companies out there already doing that. Others should also learn from and do, and that we should encourage.

What are the leading academics, the leading civil society organizations and other investors that are thinking about this doing?

And so we did just that, and we went out and talk to these people in the companies, from healthcare to tech to consumer financials, where AI is really at the forefront of their business.

And then we also wanted to make sure that we made use of all the expertise that we have internally in the fund.

We have a lot of people working on AI for the fund, and we wanted to make sure that we made the most of the knowledge that we have inside the fund.

And so we reached out to the people working in our technology team.

We brought everyone together in a workshop both the technology experts, but also the people investing in companies, in tech companies and healthcare companies and other companies where AI is the key element.

And we all sat down together and what do we think are the key elements?

What are the opportunities, what are the risks and how do we address them?

So one thing is really how we developed this view, and we wanted to make sure that it was airtight and relevant, to our portfolio,

but we also since then have done a lot on the implementation side, which you've been a part of, Mille.

What does that entail exactly?

Absolutely.

So we launched our view at Arendalsuka which is a political event in southern Norway.

One part of implementation that has been to spread our view.

So it's very important for us to get our view across quite far and wide.

So we've sought key moments like events and conferences to get this across.

In addition, we've also embedded our view into our company dialog.

So AI is such an interesting topic because it encompasses a lot of companies.

So as a user or a developer, it will be relevant.

AI is also a topic where regulatory standards have yet to fully materialize.

So we see that there is scope for us as investors to come in with our input and perspective on what responsible AI means.

And we want to contribute to well-functioning markets and to raise market standards.

And that is why we have promoted our standard setting work as well.

For instance, by joining the OECD AI expert group on AI Risk and Accountability and the World Economic Forum Responsible Stewardship for Investor Project.

AI is the one that I've been thinking about my whole life.

These models are still not very good.

They hallucinate a lot.

They're not very smart.

They have all these problems, and yet people are using their human ingenuity to figure out how to work around that and still leverage these tools.

We live in a more dangerous world, and climate change is driving conflicts.

In my mind, climate is as political as gravity.

In 2023, we worked on the implementation of our Climate Action Plan.

Here, our ambition is for portfolio companies to reach net zero emissions by 2050.

To help this, we released a new document in 2023, a sharpened climate change expectations, and we published it at New York Climate Week in September.

In this document, we spent more time looking at transition plans or the “How” of a company strategy, the approach the company will take and the technologies they'll use, as well as the associated investments.

We then spent the rest of the year scouring the globe for climate laggards and climate leaders to put our work to the test.

We talked to energy companies in Brazil, mining companies in Australia and steel companies in China to name but a few.

We talked about how to make jet fuel from food waste. New batteries, the size of soccer pitchers, but also things like methane leaks from coal mines.

We came across certain challenges as well.

Supply chain bottlenecks, for example, and permitting delays blocking some of these new technological advances.

Overall, we had 600 interactions with companies in 2023 that covered climate change and these covered almost 70% of our financed emissions.

Those are the emissions that we're deemed responsible for through our investments.

Now, companies won't always move at our desired pace on these topics.

So in 2023, we also got serious with some of the climate change laggards in our portfolio.

We increased our votes against company boards and we also filed shareholder proposals for the first time on climate.

Voting is one of our most important ownership tools.

Every year we vote on more than 120,000 resolutions at more than 12,000 annual shareholder meetings.

And this is really a way we can drive change in the companies we have invested in.

We had some against votes last year and following which the companies want to have a deeper conversation with us.

Our ambition is to be the most transparent investment fund in the world, and this extends to how we vote at the meetings of the companies that we're invested in.

For us, transparency's important because it helps us to be a predictable and responsible owner, both to the individual companies that we're invested in, but also for the wider market, making clear where we stand on different issues.

As a shareholder, we have the right to vote on things like the election of board members and how executives are paid.

We can also vote on proposals put forward by other shareholders, which can be on a range of topics like climate change and human rights.

Since 2016, we've published our vote guidelines which explain generally how we vote on different issues to help with our transparency.

These guidelines sit alongside a range of other documents which explain what we think about different governance issues and also the expectations we have of the companies that we're invested in on important sustainability topics.

Since 2021, we've been publishing our voting intentions five days before company meetings.

If we intend to vote against the board's recommendation on any matters, we provide a short explanation.

In 2023, we took this one step further and started providing a rationale any time we vote against a sustainability related shareholder proposal, even if this is in line with what the board recommended.

By doing this, we want to be as transparent as possible for companies, but also for all the stakeholders, including other investors, who might be interested to see how we voted, particularly on contentious votes.

We've been working with some academic researchers to understand what impact our disclosures are having,

and the initial results suggest it is effective.

If we vote against the proposal and state that we intend to do so.

A proportion of other investors follow suit and we see descent levels on average going up by three percentage points.

It is very well understood that nature plays a critical role when it comes to delivering products and services that are needed in the global economy.

Unfortunately, at the same time, we're witnessing an unprecedented rate of nature degradation and loss,

and this poses challenges for businesses and for their investors.

We invest across different sectors and markets, and this means that we are exposed to nature risks throughout our global portfolio, especially when we take into account our long term investment horizon.

Essentially, we have nowhere to hide from interest.

We cannot divest from the entire global economy.

Instead, we need to tackle this challenge head on

and we need to do this by improving the markets we invest in, by making our portfolio more resilient and by engaging with the companies that we own to support them in transitioning towards more environmentally friendly business practices.

To achieve this, we need the appropriate information and we need the right tools to act.

One of these tools is a framework developed by the Taskforce for Nature-related Financial Disclosures, or the TNFD for short.

For the past two years, we have taken an active role in designing and developing this framework.

We have been collaborating with many different stakeholders and we've been offering our insights to ensure that the framework is robust and practical from our investor viewpoint.

As investors, we need consistent, comparable and reliable information from the companies we own, covering the environmental and social issues that are financially material to their business, including but not limited to nature risk.

Now, with the initial TNFD creation and design phase largely completed, it is time to turn to implementation and to start using this tool actively.

This means asking companies that we own to start applying the framework.

We think this will provide us and other market participants with important information that we need to inform our decisions.

It also means that we will be applying the framework ourselves by assessing our global portfolio to better understand how our investments impact and depend on nature, and to use these insights to further strengthen our responsible investment work.

With our 2023 Responsible Investment Report we are actually sharing an initial set of disclosures inspired by the TNFD recommendations.

A big, big thank you to all of our topical experts.

As you’ve seen, 2023 has really been an eventful year for the fund.

There's so much more we've done in 2023 and you can read it all in our report that's published on our website.

Happy reading.