Big names including Figueres call out Norway’s wealth fund on climate

Investment exposure to fossil fuels could worsen transition risk for Norway, statement warns

Paris Agreement architect Christiana Figueres is leading a call by global climate experts for Norway’s $1trn wealth fund to commit to Net Zero. 

The former head of the UN’s Framework Convention on Climate Change, which oversaw the 2015 creation of the Paris Accord, has co-signed a statement urging Government Pension Fund Global (GPFG) – the world’s largest sovereign wealth fund – to join the UN’s Net Zero Asset Owner Alliance (NZAOA). 

NZAOA is a group of more than 40 institutional investors that have committed to decarbonising their portfolios by 2050 or sooner, in part by setting interim 2025 targets aligned with a 1.5°C climate scenario. 

The 35 signatories to the statement also include leading climate economist Lord Nicholas Stern, Oxford University academic Ben Caldecott, political scientist Francis Fukuyama, economist Jeffrey Sachs and former IMF and World Bank board member Octaviano Canuto.

They note that, despite its portfolio carbon footprint being more than double Norway’s annual emissions, GPFG hadn’t adopted specific emissions targets. They warn that, coupled with the Norwegian economy’s reliance on oil and gas, the country’s “productive and financial assets” were exposed to greater climate transition risk.

The Norwegian government, which helps dictate the strategic direction of GPFG, is already under pressure from domestic asset manager Storebrand and NGOs to sign the wealth fund up to NZAOA. 

The signatories suggest that the government could issue a “climate-aligned mandate” to GPFG, while continuing to “maintain its independence as a commercial investor”.

They also call on GPFG to align its investments with Norway’s international climate commitments, and to make sure its shareholder voting guidelines are consistent with a 2050 Net Zero target.

The call to action was part of an annual survey of more than 100 central banks, sovereign funds and public pension funds published by the Official Monetary and Financial Institutions Forum (OMFIF) on Friday.

31% of central banks surveyed said that ESG did not fit with their investment strategy, while a further 16% said that they face legal and regulatory restrictions on ESG investing. In addition, the survey described concerns among central banks that “integrating ESG in reserves management could damage their independence and credibility”.