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Norway’s SWF to Vote on Climate Change Disclosure for BP and Shell

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Norges Bank Investment Management (NBIM), manager of Norway’s sovereign wealth fund, intends to vote in favor of special shareholder resolutions at the general meetings of energy titans BP and Royal Dutch Shell. These resolutions call for listed companies to detail risk and opportunities associated with climate change and have it incorporated into their annual reports. This is the first time NBIM is publishing its voting intentions before the annual shareholder meeting.

In a press release, NBIM CIO of Equity Strategies Petter Johnsen stated, “As a long-term investor, we believe that the identification of future scenarios for climate regulation, carbon pricing, and environmental conditions is a useful tool to support strategic decision-making and we thereby support these resolutions.”

BP Ownership

By analyzing recent filings, NBIM is the largest sovereign wealth fund investor in BP, holding 2.6% ownership and over 394 million shares. NBIM trails behind BlackRock and Legal & General Investment Management Ltd. in ownership stake sizes. The Kuwait Investment Office, part of the Kuwait Investment Authority (a long-time BP investor), holds a 1.8% stake in BP. SAFE Investment Company holds a 1.63% stake in BP. NBIM is ranked fourth in common equity ownership of Royal Dutch Shell.

According to an April 10th update from Norway’s Ministry of Finance, the wealth fund plans to dump listed equities that emit “unacceptable levels of greenhouse gases.”

SWFI First Read, June 22, 2018

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JPMorgan Fund Buys 40% of Oxford Properties’ French Portfolio

A fund advised by JP Morgan Asset Management committed €400 million in Oxford Properties’ French portfolio. Essentially, Oxford Properties sold a 49.9% non-managing interest in 32 Rue Blanche, 92 Avenue de France and Paris Bastille. Oxford Properties made its maiden investment in Paris in 2014 when it acquired 32 Rue Blanche.

Oxford Properties is the real estate unit of OMERS.

Temasek Explores Further Cash Commitments to FirstCry

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DOL Fiduciary Role is Struck Down by Fifth Circuit Court of Appeals

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The U.S. Court of Appeal, Fifth Circuit, confirmed a March 15th decision to strike down the U.S. Department of Labor’s (DOL) fiduciary rule. The fiduciary rule is a series of seven different rules that broadly interpret the term “investment advice fiduciary” and redefine exemptions to provisions concerning fiduciaries that appear in the Employee Retirement Income Security Act of 1974 (ERISA). The 5th U.S. Circuit Court of Appeals overturned a decision by a Dallas federal court that had upheld the DOL fiduciary rule.

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Supreme Court Ruling on Online Shoppers Sales Tax Could Impact SWF Investing

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In a 5-4 ruling, the U.S. Supreme Court ruled that U.S. states could mandate online shoppers to pay sales tax when they make online purchases. This new ruling overturns a ruling from 1992.

Sovereign wealth funds directly invested at least US$ 9 billion in internet-related retail businesses from January 1, 2015 to March 31, 2018, according to SWFI transaction data. This is not counting fund commitments or funds invested. Sovereign funds have been plowing capital into online mega giants such as Amazon and Expedia, while spending big on e-commerce startups in the United States.

“Each year the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States. These critiques underscore that the physical presence rule, both as first formulated and as applied today, is an incorrect interpretation of the Commerce Clause,” Justice Anthony Kennedy penned in an opinion joined by Justices Clarence Thomas, Samuel Alito, Ruth Bader Ginsburg, and Neil Gorsuch.

“Retailers have been waiting for this day for more than two decades,” the National Retail Federation said in a statement.

Already a number of U.S. states enacted laws mandating online marketplaces to collect sales taxes on behalf of third-party sellers.

The case is South Dakota v. Wayfair, 17-494.

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