Norway’s $1.4trn NBIM says stricter net zero rules and active engagement are paying off

A combination of stricter sustainability reporting rules and more pressure via active engagement are pushing more and more companies towards more ambitious net zero targets, the chief executive of Norway's $1.4 trillion sovereign wealth fund has said.

CEO Nicolai Tangen said Norges Bank Investment Management (NBIM) is increasingly taking an pro-active, direct engagement approach with divestment more and more seen as a credible option while the investment giant is demanding "maximum transparency" from its investee companies.

"When you own everything there is nowhere to hide," Tangen said at an event in Oslo.

"The fund is cranking up the number of meetings it has with the companies it owns and going forward will increasingly divest "for climate reasons," he told an audience of Scandinavian investors.

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A growing number of investee companies in the vast investment portfolio of the world's biggest investor in publicly traded firms  are making climate a priority with the reduction of emissions among their key targets.

In fact, Wilhelm Mohn, global head of corporate governance at NBIM, revealed that just over 64% of emissions released by the 9,000 companies in the fund's portfolio were covered by 2050 Paris Alignment targets at the end of June. 

Mohn pointed out that last year this number stood at 58% and is nearly double the percentage in 2020.

He explained the jump primarily due to "the climate risk outlook has worsened."

Mohn stressed that "2023 has been a real wake-up call for many; weather events, droughts and shortages of water and electricity are reshaping competitive advantages across industries around the world and will continue to do so."

NBIM urged its investee companies in September of last year to set more ambitious interim targets and move it implement credible plans to bring emissions down.

The investment giant stressed at the time that this does not solely applied to its companies in the fossil fuel space, but also to steel, cement, chemicals, transport, construction and other high-carbon players.

"When you own everything there is nowhere to hide," CEO Nicolai Tangen said at an event in Oslo on 17 October.

"The fund is cranking up the number of meetings it has with the companies it owns and going forward will increasingly divest "for climate reasons," the industry veteran added.

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