Norway’s Sovereign Wealth Fund Sets Stricter Climate Transition Guidelines

Norway’s $1.4 trillion sovereign wealth fund, recognized as the world’s largest, has unveiled more rigorous demands for companies within its portfolio to address climate risks. In a statement released on Friday, the fund’s Chief Governance and Compliance Officer, Carine Smith Ihenacho, emphasized the urgency of shifting from mere target setting to comprehensive transition planning as climate change’s impacts become increasingly apparent.

Climate Action Demands

The sovereign wealth fund has made it clear that companies must go beyond setting climate targets and focus on developing tangible transition plans. The move underscores the growing recognition of the need for immediate and impactful measures to combat climate change.

Use of Voluntary Carbon Credits

In conjunction with these demands, the fund has issued a policy regarding the use of voluntary carbon credits by the companies it invests in. While emphasizing that companies should prioritize reducing their own emissions, the fund acknowledges the potential for verified credits to complement these efforts and demonstrate ambitious climate goals.

  • Carbon credits should not substitute for science-based interim emission reduction targets.
  • Transparency regarding the origin and utilization of carbon credits is paramount.

Towards Net Zero Emissions by 2050

The sovereign wealth fund has highlighted the inevitability of carbon removals for numerous companies striving to achieve net-zero emissions by 2050. This move represents a critical step in aligning investment practices with global climate goals.

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