By Anders Lorenzen
The world’s largest sovereign wealth fund, built on oil and gas riches, Norway’s Government Pension Fund, also known as the Oil Fund, has said it has maintained pressure on companies in its portfolio to adhere to net-zero emissions by 2050.
The statement by the fund, which is managed by Norges Bank Investment Management (NBIM), comes this week despite US President Donald Trump’s rallying against climate action and the clean energy economy.
The world economy cannot run away from climate change
The fund’s CEO, Nicolai Tangen, said, “The global economy cannot outrun climate change, so neither can our investments.”
The wealth fund was established in 1990 on the back of the Scandinavian country striking gold with a series of large oil discoveries in the 1970s. It is the world’s largest wealth fund, with a staggering value of over $2 trillion in assets, a value that is increasing by the day.
Increasing climate pressure on portfolio companies
The fund unveiled its 2030 climate plan on Wednesday this week. It pledged to increase the pressure on companies that fail to meet its values and ethics regarding tackling climate change.
They further said they would use their shareholder influence by voting against a company’s board if they disagreed with its approach to climate change, and opened up the option to file their shareholder proposals.
In the wake of the Trump agenda, some companies are backing away from their ESG and net-zero agendas or are at least being less public about them than they were prior to the second Trump Administration.
But the fund has also exposed its vulnerabilities as around half its value of around $1 trillion is invested in the US, split across bonds, equities and real estate.
Climate risk equals financial risk
The Norwegian wealth fund has stressed that its two core objectives are to secure investment returns that align with its approach to climate change, which is rooted in net-zero emissions by 2050.
But fundamentally, at the heart of their agenda—the funds management—they see climate risk as equal to financial risk, with the climate plan stating, ‘Climate change, encompassing physical risk, transition risk and transition opportunity, are material risk factors; the magnitude of which has increased since the launch of our first plan.’
Twenty years of engaging with climate change
Following this, the fund’s management stresses that its climate approach is financially motivated and the result of twenty years of development. Their first climate change discussion with a company in its portfolio took place in 2006. Moving forward, the fund aims to be a global leader in managing the financial risks and seizing the innovative opportunities that arise from climate change.
Increasing renewable energy investments
Additionally, the fund announced that it’s continuing to ramp up renewable energy investments in its portfolio, which has increased by 84 billion Norwegian kroner. The fund has divested from 44 companies due to climate risks and reversed eight divestment decisions.
As an example of how they engaged with companies to ensure and push for their climate change stance, they added that they engaged with companies that represent 71% of financed emissions and voted against directors at 69 companies on the grounds of inadequate climate risk management. Additionally, they filed seven shareholder proposals and took three of them to the company’s Annual General Meetings (AGMs).
The fund also outlined the progress it has made from its 2025 to 2030 climate plan with companies. Emissions are covered by science-based net-zero targets, increasing from 57% to 76%. The funds financed emissions and carbon intensity dropped by 5% and 11%, respectively, while the net value of the equity portfolio grew by 24%.
Anders Lorenzen is the founding Editor of A greener life, a greener world.
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Categories: economy, emissions, Energy, Europe, finance, investments