Brussels (Brussels Morning) Norway’s state-run sovereign wealth fund will call on many of the companies in its current portfolio to take more concrete action on climate change, according to its head of governance and compliance.
“We have for a long time focused on better company disclosure”, fund executive Carine Smith Ihenacho said. “Now we are focusing more on actions. So, now you need to go from numbers to action, concrete steps that companies are taking to meet the expectations”, she told Reuters.
The Government Pension Fund Global, established in 1990 to manage the country’s surplus revenues from the petroleum sector, has grown to become the largest sovereign wealth fund in the world. Currently it manages more than 1.3 trillion dollars in assets, including 1.4% of all global stocks and shares.
According to the fund’s estimates, its portfolio’s carbon footprint was 107.6 million tonnes of CO2 equivalent in 2019, which is approximately twice as much as Norway itself emitted that year.
The fund’s new direction will see it setting out expectations for companies it invests in, primarily in how they protect nature’s biodiversity. “The first step is really to assess in some depth, which companies are the most exposed, which companies are lagging, and then we’ll engage with selected companies, in particular in exposed sectors, such as the food sector, the extractive sector”, Smith Ihenacho said.
She also announced that the fund will start voting against company chairs, or chairs of relevant committees, in cases where the fund’s managers believe a company’s leadership is not addressing the climate issues in an adequate manner.
The latest effort comes after the fund warned companies it would vote against board appointments by companies that do not have at least two women on their boards, It has been calling on companies to set targets if women account for less than 30% of their directors. According to Smith Ihenacho, this approach has proved effective, with some of the 150 companies where the fund voted against appointments having since appointed more women to their boards.