www.environmental-finance.com
London, 9 April:
Norway's finance minister had proposed that the government's $39 billion pension fund allocates $3 billion to sustainable investments - potentially the largest such allocation ever made. In a report last Friday to the Storting, Norway's parliament, the finance ministry also proposed a major study on the effects of climate change on the financial markets, and the greater integration of social and environmental considerations in the fund's management.
"We take climate change seriously" said Kristin Halvorsen, Norway's finance minister. "These measures we are proposing will ensure that the Government Pension Fund - Global will be among the leading funds internationally in this area." The ministry provides no details as to what investments the fund might make. The report said that "infrastructure and unlisted equities, environmental bonds and placement of parts of the listed equities portfolio based on an environmental index are most relevant".
"The investments must be aimed at eco-friendly assets or eco-friendly technology that is expected to yield indisputable environmental benefits, such as climate-friendly energy, improving energy efficiency, carbon capture and storage, water technology, and management of waste and pollution," it said. The report also said that work is to continue to assess whether to set up an investment programme aimed at "sustainable investment opportunities" in emerging markets.
Rather than earmarking money for a particular fund, the ministry intends that the investment programme will run across asset classes, with the scope of the investment varying according to opportunities at any given time. The ministry argues that capacity constraints on investments in green technologies and unlisted companies means that around NOK 20 billion ($3 billion) should be invested over a five-year period.
However, Norges Bank - Norway's central bank, which is responsible for managing the fund's assets - is understood to be opposed to the move. In a circular written late last year, the bank expressed a view that any such allocation to sustainable investments such be made via the national budget, rather than from the pension fund. A spokeswoman declined to comment on the ministry's proposal.
Elsewhere, the ministry called for the fund to adopt "a broader perspective: consideration of environmental and social aspects and good corporate governance are going to be integrated to a greater extent as relevant factors in all aspects of the management of the fund." The ministry of finance has become a signatory to the UN Principles for Responsible Investment, which aim to integrate environmental and social issues in investment management.
It is unclear when any investments might be made, although the ministry is to present the Storting with a "concrete plan for future work in this area" ahead of the 2010 national budget.
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