Yngve Slyngstad, head of Norges Bank Investment Management, has called for more rationality in the sustainable investment debate, with data underpinning all decisions.
The chief executive at NBIM, in charge of the NOK6trn (€699bn) Government Pension Fund Global, said the wish for better data to underpin investment decisions was one of the reasons the central bank’s asset management arm had allocated funding to research on responsible investment.
Speaking at the Geneva Summit on Sustainable Finance, organised by the University of Geneva’s Institute for Environmental Sciences, Slyngstad outlined the sovereign fund’s approach to sustainable, long-term investing and how it factored into matters of engagement and ethics.
He told delegates that it was for politicians to consider all matters of ethics, not NBIM, and said he stood by his comments from earlier in the year that coal was not a particularly profitable industry.
His comments come less than a week before a parliamentary group is set to recommend whether the fund should divest its coal and petroleum holdings.
Slyngstad also explained why NBIM felt the need to allocate part of its research budget to responsible investment and sustainable finance.
“We do this because we think there needs to be both a better set of data and more rationality around the whole discussion,” he said. “We need to go from just words to numbers.”
The chief executive also said the 1% of the fund earmarked for environmental purposes, up from the initial 1% of the equity portfolio, surprised him due to the absence of renewable energy projects.
“A lot of those investments are really more on the technology side,” he said, noting the importance of technology that facilitates energy saving.
“The whole area of renewable energy is, of course, something we follow closely, but it is not that large of an [amount] of the fund today.
“Renewable energy was, of course, the starting point, but energy storage has become more important, transportation, of course, is [in] there, waste and water management are very important as we go along, and even agriculture.”
Slyngstad said the environmental portfolio, currently managed by seven external managers and consisting well over 150 companies, could have enjoyed “enormous enthusiasm” had it been very profitable.
However, while NBIM outperformed environmental indices, it still underperformed the market as a whole over the past five years.
Despite this, the last two years have been “very, very profitable”.