Norway wealth fund tells companies to plan for climate transition - Reuters
Norway wealth fund tells companies to plan for climate transition | Reuters
Norway wealth fund tells companies to plan for climate transition
A general view of the Norwegian central bank, where Norway's sovereign wealth fund is situated, in Oslo, Norway, March 6, 2018. REUTERS/Gwladys Fouche/File Photo Acquire Licensing Rights
- Companies
OSLO, Sept 15 (Reuters) - Norway's $1.4 trillion sovereign wealth fund, the world's largest, revealed stricter demands on Friday for how companies it invests in should handle climate risk, telling boards to move from target setting to transition planning.
"With the effects of climate change becoming more evident, we really saw the need to sharpen our expectations," the fund's Chief Governance and Compliance Officer Carine Smith Ihenacho said in a statement.
The fund also published a policy concerning the use of voluntary carbon credits, which it said companies could use in certain cases.
"We believe companies should prioritise reducing own emissions but can use additional and verified credits as a supplement to signal high climate ambitions," it said.
Carbon credits should not be counted towards science-based interim emission reduction targets, and companies must be transparent about the details of credits they use, it added.
"Ultimately, carbon removals will be needed by many companies seeking to achieve net zero emissions by 2050," the fund said.
Reporting by Terje Solsvik, editing by Essi Lehto
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Related Knowledge Center: Climate economics
Climate change is now a driver of the world’s economy. The impact is profound:
- Catastrophic weather events — hurricanes, floods, droughts, high temperatures — are more frequent and more extreme. The cost can be measured in both the initial damage caused and the longer-term impact on the economy.
- Vulnerable communities are increasing climate-related investments, hardening infrastructure and taking other protective measures.
- Investment in carbon capture and storage technologies is increasingly rapidly.
- Governments are making investments and crafting regulations to reduce emissions of carbon dioxide and other greenhouse gases.
On top of all of this is the cost of uncertainty. As the Fourth National Climate Assessment, released in 2018 by the U.S. Global Change Research Program, says, “The assumption that current and future climate conditions will resemble the recent past is no longer valid.”