Norway announces €2.3bn environmental and sustainable investments for Government Pension Fund

The Norwegian government has outlined plans that could see it allocate a huge NOK20bn (€2.3bn) portion of the assets of the €260bn Norwegian Government Pension Fund into environmental investing and a potential programme aimed at sustainable growth assets in emerging markets over five years. In the report by the Ministry of Finance to the Storting Norwegian Parliament, it also recommended that the pension fund exclude tobacco manufacturers from its portfolios. Other major recommendations include the introduction of a public “watch-list” for companies the fund considers could be in breach of international human and labour rights standards. The Ministry has also called for a strengthening of the fund’s ‘engagement’ lobbying process with companies of concern before opting for the nuclear option of blacklisting from its portfolios. Additionally, in a significant boost to the United Nations Principles of Responsible Investment (UNPRI), the Norwegian Ministry of Finance said it would become the first government entity to become a signatory as de facto owner of the Government Pension Fund assets, and would seek to drive its responsible investment policy for the fund according to the PRI’s six guiding principles. Kristin Halvorsen, Norwegian Minister of Finance said the €2.3bn environmental and sustainableinvesting programme, was subject to further reports from Norges Bank, which runs the Government Pension Fund assets. However, the Ministry has suggested that the lion’s share of climate change allocations should be into infrastructure and unlisted equities such as venture capital. Halvorsen said: “The environmental programme will be aimed at investments that can be expected to yield indisputable environmental benefits, such as climate-friendly energy, improving energy efficiency, carbon capture and storage, water technology and management of waste and pollution.” She said the government would also initiate a broad study to assess how the challenges of climate change may affect the financial markets and how investors ought to act as a result. “In the same way as the Stern Review provided important knowledge about the impact of climate change on the general economic development globally, work of a similar nature might shed light on the effect on financial markets more specifically,” she said. Norges Bank has also been asked to prepare reports outlining its expectations for engagement with companies, notably on the environment and corporate climate change strategies.
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