Norway’s sovereign wealth fund has sought to clarify its position on whether the companies it invests in should use Environmental Attribute Certificates (EACs) to reach net-zero targets, saying it only supports their use in certain situations.
Publishing its official view this morning on corporate use of EACs – tradeable instruments that certify the environmental and climate-related attributes of commodities, activities, or projects — Norges Bank Investment Management (NBIM) said: “We believe portfolio companies should prioritise reducing emissions from their own operations and value chains.
“However, the procurement of EACs can be a helpful interim solution where direct mitigation is not yet feasible.”
In the statement, authored by NBIM chief governance and compliance officer Carine Smith Ihenacho and senior investment stewardship manager Kristin Verpe, NBIM said the view was being published as the Science Based Targets initiative’s (SBTi) Corporate Net Zero Standard underwent major revisions, adding “we support SBTi’s efforts to find actionable solutions for companies making credible efforts”.
Two years ago, the SBTi came in for widespread criticism when it announced that it might allow companies to use EACs for abating certain emissions.
NBIM, which manages the NOK20.9trn (€1.85trn) Government Pension Fund Global, said that while it generally did not support use of EACs to address emissions from direct operations (Scope 1), it did support certain use cases for energy consumption (Scope 2), and encouraged “a more flexible approach to EACs for value chain emissions (Scope 3)”.
NBIM said any EACs purchased, however, “should be of high quality, and demonstrate additionality, traceability, and verifiability”.
“Companies should clearly distinguish between emission reductions from direct mitigation versus EACs in their reporting,” the Oslo-based organisation noted.
Smith Ihenacho and Verpe said NBIM’s view on corporate use of EACs might continue to evolve over time as markets, standards and technologies developed, and said NBIM was also following developments in biodiversity credits.
“In line with the mitigation hierarchy, we expect companies to only use biodiversity credits as a last resort for nature impacts that cannot be avoided, minimized or restored,” they said.
