Norges Bank Investment Management (NBIM) announced it has seen a positive return of NOK10bn (€878m) since 2012 as a result of responsible investment.
In its 10th responsible investment report, NBIM – the asset manager to Norway’s NOK16.5trn sovereign wealth fund Government Pension Fund of Norway (GPFP) – shared the progress of its ownership activities in 2023, and revealed during a press conference this morning that divestments linked to climate change and human rights increased the fund’s cumulative returns, while corruption decreased them.
According to NBIM, the fund’s pre-screening of companies entering its benchmark index and risk-based divestments increased in scale in 2023.
“We pre-screened more than 1,000 companies that came into our index and decided to not own 54 of these. Altogether, we divested from 86 companies due to high environmental and social risks. Since 2012, these investment decisions have contributed NOK10bn to fund returns,” NBIM disclosed.
In addition to that, climate change and human rights accounted for the majority of its divestments last year.
NBIM chief executive officer Nicolai Tangen, chief governance and compliance officer Carine Smith Ihenacho, global head of active ownership Wilhelm Mohn, and head of environment Eivind Fliflet, who presented the firm’s responsible investment work from last year, added that climate action, AI and transparency were among its key areas of focus from last year, with more than 800 meetings held throughout the year on climate change, as well as 631 on AI, up from 177 in 2022.
Additionally, they shared that the Ministry of Finance had issued ethically motivated guidelines for observation and exclusions from the fund and had set up an independent Council on Ethics with the responsibility for making ethical assessments of companies.
As a result, the council can recommend that companies should be excluded from the fund or placed under observation. NBIM can also exclude companies or place them under observation on its own initiative under the coal product criterion and the conduct-based greenhouse gas criterion.
Speaking of the sustainability goals of the fund’s holdings, Ihenacho added: “An increasing number of companies have targets and transition plans. However, there is still a way to go before we reach our goal of net zero targets and transition plans for all the companies in the portfolio.”
NBIM also said that while AI has the potential to create vast potential, it also poses risks to companies, consumers and society.
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