The Norwegian government has responded to this week’s call by academics for the country’s sovereign wealth fund to commit to net-zero emissions, saying most politicians agree the NOK12.1trn (€1.16trn) fund should not be used for climate policy – and that it will present reports on the SWF’s climate risk at a seminar later this month.

Thirty-four economists and other experts from Norway and around the world signed a joint article calling for Norway’s SWF to join the UN-convened Net Zero Asset Owner Alliance, thereby pledging to cut portfolio greenhouse gas emissions to net zero by 2050.

The article was published on Tuesday by the London-based think tank Official Monetary and Financial Institutions Forum.

The document said the carbon footprint of the GPFG’s equity portfolio was more than twice Norway’s annual total emissions, but that despite this the fund had no specific emissions targets and was mainly focused on climate risk rather than climate impact.

Asked for a response to the article by IPE, State Secretary Kari Elisabeth Olrud Moen in the Finance Ministry said: “The investment objective of the Government Pension Fund Global (GPFG) is to achieve the highest possible return, given an acceptable level of risk.

“The investment strategy and framework for management of the fund are defined by the Ministry of Finance, with key choices having been endorsed by the Norwegian parliament, the Storting,” said Olrud Moen, who belongs to the Conservative Party.

She said Norges Bank was responsible for the operational management of the fund and had to handle various types of risk, including climate risk, within this framework, and there were no requirements in the mandate for the fund’s investments to be adapted or contribute to the achievement of specific climate goals.

“The GPFG has a financial objective, and there is broad political agreement within the Storting that the fund should not be an instrument in climate policy,” she said.

But there was great uncertainty about how climate change would affect the global economy, she said, which gave rise to financial risk – assessments of which formed an integral part of Norges Bank’s risk management, investment decisions and active ownership.

“Climate risk is a complex financial risk factor, which differs from other forms of market risk,” Olrud Moen said in the response, adding that this made managing and pricing such risk challenging for financial market participants.

“The Ministry has launched an initiative to expand knowledge of how climate change, climate policy and the Green Shift may affect investors like the GPFG,” she said.

She mentioned the expert group which was commissioned early this year to look into financial climate risk and climate-related investment opportunities in relation to the SWF, which is being led by Martin Skancke, who chairs the PRI board – and also the analyses from Norges Bank on the fund’s climate risk exposure.

“The Ministry will arrange a seminar later in August where the various reports and analyses will be presented,” the state secretary said.

Olrud Moen added that the Finance Ministry was planning to present a comprehensive review of climate risk and climate-related investment opportunities for the GPFG in the white paper on the fund next spring.

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