Norway’s Government Pension Fund Global (GPFG) has told the UK body currently designing a template for company climate transition plans that it basically agrees with the formula being proposed.
But it also took the opportunity to stress the need for corporate targets and plans to be science-based, in an ideal scenario.
Norges Bank Investment Management (NBIM), which runs the NOK12trn (€1.2trn) sovereign wealth fund, said in its response to the UK Transition Plan Taskforce’s (TPT) call for evidence on a Sector-Neutral Framework for private sector transition plans: “We broadly agree with the principles and key elements proposed by the TPT in the consultation document.”
In the response, written by Carine Smith Ihenacho, NBIM’s chief governance and compliance officer, and Severine Neervoort, lead ESG policy adviser, the SWF manager supported the TPT’s ambition to develop a standard that would help companies prepare rigorous transition plans.
As a global investor, they said, NBIM – part of Norway’s central bank – had a clear interest in sustainability information being reported in a consistent and comparable manner across markets.
However, while NBIM welcomed the definition of a transition plan proposed by the TPT, they said: “The definition could also reflect that, ideally, targets set by the company should be science-based, making it clear how plans align with an economy-wide net zero transition.
“Furthermore, the definition could refer to climate-related opportunities, in addition to risks,” the NBIM women wrote.
A transition plan should, NBIM said, ideally have science-based targets, as well as interim milestones and actionable steps the company was planning to take to reach its targets.
The Oslo-based manager expected companies to report on their exposure to climate-related risks and opportunities, how those were managed, and relevant performance metrics, said Smith Ihenacho and Neervoort.
“If climate change presents material risks or opportunities for a company, it should disclose a strategy and implementation plan to address these, and report at least annually on progress towards such plans,” they said.
According to the Science Based Targets initiative, such targets line up with what the latest climate science deems necessary to meet the goals of the Paris Agreement.