Norway's sovereign wealth fund has announced that it will support a shareholder proposal on human rights risks at Microsoft's upcoming annual shareholder meeting and publicly oppose the company's management. The proposal requires Microsoft to issue a special report on the risks it faces doing business in "countries with concerning human rights conditions," and company management had previously recommended that shareholders vote against the motion.
Norway's sovereign wealth fund, which has a scale of about US$2 trillion, said the board of directors must explain the significant sustainability risks faced by the company, as well as the broader environmental and social impacts of the company's operations and products. The fund notes on its website that operating in countries with prominent human rights issues can have a significant impact on a company's reputation, compliance costs and long-term shareholder value, calling for greater transparency and systematic assessment.
In addition to "singing a different tune" from management on the issue of human rights reporting, the Norwegian fund also said it would vote against Microsoft CEO Satya Nadella's continued appointment as chairman of the board and oppose his compensation package. The fund has always advocated the separation of the positions of chairman and CEO to strengthen the independence of the board of directors and the accountability mechanism of corporate governance. It also emphasizes that a considerable proportion of executive compensation should be issued in the form of long-term locked stocks. The lock-in period should be between five and ten years and linked to the long-term performance of management.
From a shareholding perspective, this stance carries considerable weight. According to public data, as of June 30, the fund held approximately 1.35% of Microsoft's shares, with a market value of approximately US$50 billion, making it the second largest stock holding in its overall portfolio, second only to Nvidia. According to LSEG data, this also makes the Norwegian sovereign wealth fund the eighth largest shareholder of Microsoft. Its voting trends on environmental, social and corporate governance (ESG) issues are often regarded as an important benchmark for global institutional investors.
Microsoft shareholders will vote on the human rights report proposal as well as Nadella's re-election as chairman and compensation arrangement at its annual shareholder meeting on December 5. Market observers pointed out that if long-term institutional investors, including Norway’s sovereign wealth fund, exert collective pressure, it may push Microsoft to make further adjustments in risk disclosure, governance structure and human rights compliance, and set a model for the ESG practices of other large technology companies.