NBIM Has a Plan, a Climate Action Plan

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    Stockholm (NordSIP) – As sovereign wealth management funds go, Norway’s trillion-dollar Government Pension Fund Global (GPFG), managed by Norges Bank Investment Management (NBIM), is right at the top of the list. Such impressive financial muscles are reason enough to listen carefully whenever the asset owner communicates about the fund’s investment strategy. After all, any change in direction can potentially affect the funding of more than 9.000 investee companies across 70 countries.

    On 20 September, NBIM announced they are adopting a new 2025 Climate action plan. “We have addressed climate risk in our management of the fund for over 15 years,” comments Wilhelm Mohn, Global Head of Corporate Governance at NBIM (on LinkedIn). “Today, we are pleased to launch our 2025 climate action plan. The current decade is crucial for achieving an orderly climate transition in line with the goals of the Paris Agreement. Our 2025 climate action plan describes our next steps in supporting and challenging our portfolio companies to adapt their business models and align them with net zero emissions by 2050,” he adds.

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    The plan describes NBIM’s approach to managing climate risks and opportunities. It sets out the actions the manager aims to take between 2022 and 2025, targeted at improving market standards, increasing portfolio resilience, and effectively engaging with portfolio companies. “At the heart of our efforts is driving portfolio companies to net zero emissions by 2050 through credible targets and transition plans for reducing their scope 1, scope 2, and material scope 3 emissions,” reads the document.

    Summarising the approach for managing climate risks and opportunities, NBIM indicates three main areas they intend to focus on:

    • Elevate market standards and collaborate with other stakeholders;
    • Analyse climate risk exposure and adjust the investment portfolio;
    • Own companies through the climate transition and engage for net zero.

    The document details how to implement each guiding principle at market, portfolio and company levels to make the plan more actionable and specific. “This 2025 climate action plan outlines our next steps in supporting and challenging our portfolio companies to adapt their business models and align them with net zero emissions by 2050. We expect high emitters to set net-zero 2050 targets as a matter of urgency, and all companies in our portfolio to have done so by 2040 at the very latest,” state the authors.

    The climate action plan is a result of work across the fund. It is also based on input and investigations from external experts, particularly last year’s report from the Skancke committee. The Ministry of Finance has also made changes to the management mandate that relate to the climate.

    “Our goal is to be the world’s leading investor in terms of how climate risk is managed. Our long-term return will depend on how the companies in our portfolio manage the transition to a zero emissions society,” concludes Nicolai Tangen, CEO of NBIM.

    Image courtesy of Wokandapix at Pixabay
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