By Mark Gilbert (Bloomberg)

Investors are increasingly serious about their environmental, social and corporate governance duties, withholding investment from industries they deem to be damaging the planet or society and using their votes to steer companies onto better paths. But that only works if they have a say in the boardrooms of the companies they help to finance—a voice that the so-called tyranny of indexing threatens to silence.

So Norway’s $960 billion sovereign wealth fund, the world’s biggest, is taking a stance against equity indexes including companies that aren’t subject to shareholder control. The move opens a new front in the fund’s efforts to use its considerable—and growing—clout to force companies to improve their ESG act.

Two important decisions loom for those who compile the indexes that effectively decide which companies investors have to buy (or risk under-performing versus their benchmarks). Snap Inc., which sells a photo app, did a $3.4 billion initial public offering in March comprised solely of non-voting stock. If it wins equity-index status, fund managers will be forced to buy shares that don’t carry any clout.

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