In Norway, the political agenda is about to get serious on climate change investment issues. The country’s election winner this month – the Labor party will require the Norges Bank Investment Management fund – the largest in the country, to commit to net-zero emissions by 2050.
The $1.4 trillion fund holding stakes in some of the planet’s most CO2 polluting companies like ExxonMobil and Chevron, will go all the way towards carbon neutrality. One of the commitments include insisting all companies in the fund’s portfolio to have clear targets for cutting CO2 emissions in line with the Paris Agreement deadline.
“We want the fund to use active ownership strategies to achieve net-zero across the companies in the portfolio,” said Espen Barth Eide, Labor’s climate spokesman.
Net Zero Emissions Ambitions Spike
So far, the country was reluctant to sign up the world’s biggest owner of publicly traded stocks to the net zero by 2050 target that the country has committed to. However, pressure from climate activists and rising global temperatures at a dangerous pace are forcing such changes.
The ambitions of the newly elected party to have the wealth fund target zero emissions follows a government-commissioned report that provided a list of recommendations on climate risk. One of the recommendations calls for carbon-reduction goals for the fund in line with the Paris agreement. The net-zero target is likely on the way, given its popularity across the Parliament.
The fund is not expected to dump fossil-fuel stocks in a day but oil companies without ambitious net-zero goals will be in the crosshairs. According to Eide, “credible and accountable plans” from emitters will be a must, including a plan to eliminate the Scope 3 emissions.
Statistics also suggest that if Norway’s sovereign wealth fund embraces carbon neutrality, others in the trillion wealth-fund universe will follow. That could create a knock-on effect in the positioning of capital flows that would facilitate the reduction of carbon emissions.
Norway’s largest wealth fund embracing net zero emissions by 2050 could become an example for other countries to follow. A shift in capital allocation towards sustainable investing and the net zero economy are a clear indication of what the future of the financial world could look like.
