Norway wealth fund targets biodiversity

Norway's sovereign wealth fund today called on companies in its vast portfolio to address issues of biodiversity, putting firms on notice of a new approach to investment.

Norges Bank Investment Management (NBIM), which allocates the fund's portfolio, said companies "that either depend on or significantly influence ecosystems and biodiversity shall integrate these considerations in their governance structure, strategy, risk management, measurement and reporting." Relevant sectors include mining, forestry, agriculture and energy, among others.

The wealth fund has a number of expectations of companies in which it invests, including addressing climate change, water management, tax transparency and ocean sustainability, and regularly excludes companies from the fund on the basis of these. Last year it held 2,877 meetings with companies and voted on more than 121,000 resolutions at shareholder meetings.

The Norwegian government proposed, more than two years ago, that the wealth fund divest from some holdings in the oil and gas sector, but this has not happened. In fact, the fund now has more investments in the sector than it did at the time, although they account for only 2.1pc of the overall.

Still, they helped to boost the fund's returns in the first half of this year, when energy firms were the best performing of all its equity sectors thanks to rising oil prices. The Government Pension Fund Global (GPFG), as the scheme is officially called, returned 9.4pc in the January-June period; investments in energy companies returned 19.5pc.

Its nascent interest in unlisted renewable energy infrastructure made a negative return, which NBIM attributed to exchange rate fluctuations. It has made one investment in this sector, purchasing 50pc in a Netherlands offshore wind farm in May.

The fund had a value of 11.67 trillion kroner ($1.315 trillion) as of June 30, NBIM said. The GFPG, which benefits from Norway's oil and gas revenues, has allowed the government to provide generous subsidies and incentives for the wide adoption of electric vehicles.

By Ben Winkley