Daily ESG Briefing: NBIM supports Net Zero recommendation for Norway’s sovereign wealth fund 

The latest developments in sustainable finance

Norges Bank Investment Management (NBIM) has said it supports the recommendation made by an expert group appointed by the Ministry of Finance earlier this year that the £1trn Norwegian sovereign wealth fund it manages is given a goal of working towards Net Zero emissions from companies it is invested in. In a speech today, Deputy Governor Øystein Børsum said: “Norges Bank supports this recommendation”. He explained the fund did not intend to divest from companies with high emissions, but aimed to use its investments to be "a driver for change, pushing companies to make the transition to net zero emissions". NBIM is in the top 10 shareholders at around half of its investee companies, and "we have found that companies listen to what we have to say", he continued. Børsum also mentioned that the fund had voted against six directors this year because of poor climate risk management, and said that the fund would consider filing its own climate-related shareholder proposals in future.  

The European Commission has published an FAQ document on how to report eligibility of economic activities and assets under the EU Taxonomy rules, ahead of disclosure obligations coming into force in January 2022. “We heard you! […] This non-binding guidance will help large banks, investors, insurers and non-financial companies produce EU Taxonomy-eligibility reporting,” said the Commission’s department for Financial Stability Financial Services and Capital Markets Union on Twitter.  

The Bank of Finland has announced intermediate Net Zero targets for its own investments, restricting investments in fossil fuels from 2022. It has set intermediate targets across each asset class, for example committing to sector-specific restrictions on coal, oil and gas across its corporate loans portfolio. For its sovereign investments it said it would be “encouraging governments to set adequate national determined contributions in line with the Paris Climate Agreement”. The bank said in September when pledging to make its €10.3bn investment portfolio carbon neutral by 2050 that decarbonising its sovereign bond holdings will be central to this commitment. The intermediate targets will be reviewed and the results reported regularly, with the next revision made to sector-specific restrictions on direct investments planned for 2022.   

The UK Government has launched a consultation on the design of a “climate compatibility checkpoint” for future oil and gas licensing in the UK Continental Shelf. It said that while a recent review concluded that continued oil and gas licensing is compatible with the UK's climate objective now, the “checkpoint” should be introduced so that licensing only continues for as long as this remains the case. It proposed that tests could include reductions in operational greenhouse gas emissions from the sector benchmarked internationally and sector progress in supporting energy transition technologies. Greenpeace UK's policy director Dr Doug Parr said: “The government has produced some detailed, concrete suggestions for various tests that might be favoured by industry […] but a real climate compatibility test would bring an end to new oil and gas licenses.”