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NBIM outlines expectations on climate change

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  • NBIM outlines expectations on climate change

NORWAY - Norges Bank Investment Management (NBIM) has published its draft expectations on corporate performance in relation to 'climate change mitigation and adaptation'.

The firm, which is responsible for the investment management of the NOK 2.076trn (€230.6bn) Norway Government Pension Fund - Global, revealed it is increasing its focus "on active ownership in general and climate change management specifically".

It is currently preparing a new document - NBIM Investor Expectations: Climate Change Management - which outlines what the organisation expects of companies within it's investment portfolio with regards to management of both climate change mitigation and any physical effects resulting from climate change.

The document will have the same structure as the NBIM Investor Expectations on Children's Rights, which produces regular sector compliance reports, and is intended to "serve as a reference for long-term investors and can be used as an indicator of best business practices by companies globally". (See earlier IPE article: NBIM wants improvement in child labour policies)

However, NBIM stressed the main aim of the 'expectations' is not to "blacklist or rank companies", but to act as a starting point for constructive dialogue between investors and companies.

NBIM revealed it had published the draft document to receive comments and feedback on the proposed expectations, which are divided into four different categories:

Direct operations - material effects and impacts of climate change on the company should be included in the strategic business planning Products and services - including participation in sector-relevant research to explore opportunities in a low-carbon economy Supply chain - developing a strategy for dealing with climate change risk in the supply chain Transparency - including disclosure of policy, strategies, targets and progress on climate change management in both direct operations and supply chain

NBIM noted its global portfolios are exposed to the risk of adverse economic effects of climate change, as the issue is expected to unfold over the coming decades and "regulatory responses to climate change in the form of taxes, trading schemes and different incentives have already begun to influence the markets".

It warned it is "becoming increasingly vital that investors are able to evaluate the degree to which a specific company is exposed to the risks and the opportunities that arise", so in order to "manage this process in an effective way and to prevent the worst effects of unmitigated climate change, NBIM expects companies to develop a well-defined climate change strategy in line with the standards addressed in this document".

Comments on the draft expectations should be emailed to contact@nbim.no by 31 July 2009.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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