The Government Pension Fund:

New climate criterion for the exclusion of companies from the Government Pension Fund Global (GPFG)

Published under: Solberg's Government

Publisher Ministry of Finance

The Government will introduce a new criterion to exclude companies whose conduct to an unacceptable degree entail greenhouse gas emissions. Together with a strengthening of active ownership, this represents a responsible investment practice that pays due heed to both the ethical and the financial aspects of climate change, within the role of the Fund as a financial investor, says the Minister of Finance, Siv Jensen.

New climate criterion
An expert group has examined the policy tools available to the Fund in relation to climate issues. The report from the group has been circulated for consultation.

The Government will introduce, against the background of the report and the consultative comments, a new conduct-based exclusion criterion aimed at «acts and omissions that, on an aggregate company level, to an unacceptable degree entail greenhouse gas emissions». The criterion is broad in scope, and not limited to specific sectors or types of greenhouse gases. It will also accommodate norm changes within this field over time. The wording is identical to that proposed by the Council on Ethics in its consultative comments. 

Political bodies have adopted ethically motivated criteria for the exclusion of companies from the GPFG. Some of these criteria are based on which products companies produce, whilst others are based on the conduct of companies. The intention behind the ethical criteria is to reduce the risk that the Fund is invested in companies that contribute to, or are themselves responsible for, gross violations of ethical norms.


No product-based exclusion
Energy is an input used in virtually all economic activity, and access to energy is thus of decisive importance to global welfare and development. The Government agrees with the professional assessment of the expert group that ethically motivated exclusion of all coal and petroleum companies based on their products would not be appropriate. The energy production, energy use or CO2 emissions of such companies cannot per se be said to be contrary to generally accepted ethical norms. 

- I have noted that the expert group is of the opinion that use of the Fund as a climate policy tool would be both inappropriate and ineffective. The measures introduced by the Government are premised on the broad consensus concerning the role of the Fund as a financial investor, which has facilitated the robust long-term management of our savings, says the Minister of Finance, Siv Jensen.


Engagement as the key policy tool
- Active ownership and dialogue shall remain the key tools for addressing climate issues in the management of the Fund, says the Minister of Finance, Siv Jensen.

Norges Bank has already implemented a number of the changes proposed by the expert group. Climate issues are also taken into consideration in the general risk assessments of portfolio companies carried out by Norges Bank. The Bank has in recent years made more than a hundred risk-based divestments, including holdings in coal extraction and coal power companies. Such divestments take place within the scope of the mandate set by the Ministry. 

The Ministry will request Norges Bank to conduct a specific risk-based review of portfolio companies whose involvement in coal extraction, coal power generation or coal-based energy conversion represent a significant part of their business.


Expanded environmental mandates
A number of the consultative comments call for an expansion of the Fund’s renewable energy investments. Today’s report to Parliament announces that the scale of the environment-related investment mandates for the GPFG will be expanded to NOK 30–60 billion. A process has also been launched to examine whether the Fund should be permitted to be invested in unlisted infrastructure, including renewable energy infrastructure.