Economists and experts from around the world have signed a joint article urging Norway’s Government Pension Fund Global (GPFG) to join the UN-convened Net Zero Asset Owner Alliance, whose members pledge to reduce portfolio greenhouse gas emissions to net zero by 2050.
The GPFG currently has NOK12.1trn (€1.16trn) of assets and is the world’s largest single owner of listed equities, holding just under 1.5% of them.
The article published on the website of London-based think tank the Official Monetary and Financial Institutions Forum (OMFIF) highlighted the fund’s size and said: “This makes GPFG one of the world’s largest investors, and its adherence to the Net Zero Asset Owner Alliance would be a significant step towards achievement of the objectives in the Paris agreement.”
Thirty-four academics and others signed the article, with the main Norwegians including Knut Anton Mork, professor emeritus in the department of economics at BI Norwegian Business School – who led a committee five years ago considering the SWF’s equities allocation.
Other signatories include Nicholas Stern, former chief economist at the World Bank, and Christiana Figueres, former executive secretary of the UN Framework Convention on Climate Change.
The article was penned by Håvard Halland, a senior economist at the World Bank’s finance, competitiveness and innovation global practice, investment funds group.
The document said the carbon footprint of the GPFG’s equity portfolio was more than double the size of Norway’s annual total emissions, but that despite this, the GPFG did not have specific emissions targets and was focused primarily on climate risk rather than climate impact.
“The Norwegian economy, due to its concentration in the oil and gas sector, is highly exposed to climate transition risk,” Halland wrote.
A share of the GPFG’s portfolio assets was “emissions-intensive” the article said, and therefore highly exposed to climate risk, increasing the overall transition risk to Norway’s financial assets.
“We urge the Norwegian government and the Storting (parliament) to take the opportunity of COP26 to announce the GPFG’s membership of the Net Zero Asset Owner Alliance,” the article read.
The Norwegian Finance Ministry told IPE it was not able to provide a response to the article by deadline, but would reply as soon as possible.
A spokeswoman for NBIM told IPE the organisation did not have any comments about the article.
Last month, Norges Bank – which runs the GPFG via its Norges Bank Investment Management (NBIM) subsidiary – told the Norwegian government the fund should not swap the index it currently tracked for a climate-adjusted benchmark, saying it did not believe there was enough evidence to claim climate risk was systematically mispriced.
However, NBIM is a vocal advocate internationally for increased climate-risk reporting by companies.
In mid-July, NBIM told the UK government that any new rules it is planning to improve the country’s audit and corporate governance framework should include a requirement for listed companies to address climate risks in their reporting.
Back in May, the SWF manager’s chief executive officer Nicolai Tangen told a parliamentary committee his organisation had raised climate issues in its dialogue with firms accounting for more than a quarter of the value of the equity portfolio.
He said NBIM’s expectations of companies made it clear their plans and targets had to reflect the Paris Agreement.