By Gwladys Fouche
OSLO (Reuters) -Norway’s $2 trillion wealth fund is increasing pressure on companies it invests in to cut their greenhouse gas emissions to net zero by 2050, it said on Wednesday, in a sharp contrast with the growing U.S. backlash against climate-friendly policies.
The goal of bringing all 8,500 companies in its portfolio in line with the Paris Agreement target was first formulated by the fund in 2022. In its newly updated climate plan, it will expand the list of companies it considers the highest-emitting, which it will target for a more focused dialogue.
“Climate risk is financial risk,” it said. “The fund therefore has an interest in an orderly transition to global net zero emissions.”
NORWAY FUND CONTRASTS WITH INTENSIFYING US CLIMATE BACKLASH
The fund’s updated guidelines come at a time when some international investors are backing away from ESG policies on climate change.
U.S. President Donald Trump’s administration is, meanwhile, boosting fossil fuel production, rolling back climate policies at home, and working against international climate initiatives abroad, including withdrawing from the Paris climate agreement.
The wealth fund, which manages the Norwegian state’s revenues from oil and gas production, has invested about half of its value, or about $1 trillion, in the United States, across bonds, equities and real estate.
The fund had previously concentrated largely on so-called Scope 1 and Scope 2 emissions, which come from sources owned or controlled by a company and emissions from the generation of purchased electricity and heating.
Under its new plan, it will also focus on Scope 3 emissions, or value chain emissions, produced at any point in a company’s supply chain. For many companies, these represent the bulk of their emissions.
MORE CLIMATE CHANGE DISCUSSIONS WITH COMPANY BOARDS
Companies “with the highest Scope 3 emissions” will now be added to the fund’s list of those targeted for a more focused, direct dialogue on climate change, it said in the plan.
“We will target board-level interactions on climate with companies on the climate focus list,” the plan said.
The fund did not name companies that could be affected by the change, and it was not immediately clear whether its management would take more punitive measures against laggards as a result. Generally, the fund has prioritised dialogue with companies.
The plan presented on Wednesday is distinct from separate ethical guidelines set by parliament, which lead to regular divestments by the fund. Though many of those divestments have been on environmental grounds, they are not decided by the fund’s operator, Norges Bank Investment Management.
(Reporting by Gwladys Fouche in Oslo; Editing by Joe Bavier)
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