Norway wealth fund to test business model of biggest CO2 emitters

Norway's $1.2 trillion wealth fund will ask the companies in its portfolio that emit the most carbon dioxide (CO2) for more detailed climate-related data in order to understand the risk posed to its investments, a top official said. The world's largest sovereign fund, which invests Norway's oil revenues, has for the past two decades been at the forefront of efforts to get firms to makes disclosures about the impact of their business on the environment.

"What we want to see is whether they have a business model that can survive also in a low-carbon society and to understand how will they address that," Carine Smith Ihenacho, the fund's Chief Corporate Governance Officer, told Reuters.

"We want scenario analysis, including a two-degree scenario analysis, and we want the company to be open about the assumptions for the analysis," she said, without naming the companies the fund was contacting.

The 2015 Paris Agreement calls on nations worldwide to limit global warming this century to well below two degrees Celsius above pre-industrial levels. Norway's fund is invested in 9,200 companies, or 1.5% of the world's stocks. It listed its own carbon footprint at 107.6 millions of tonnes of CO2 equivalent in 2019, which is double Norway's and had risen from 107.4 millions in 2018.

The fund has recently changed CEO, appointing hedge fund veteran Nicolai Tangen, who started this week. How companies lobby on climate change has risen higher up the agenda of investors from a decade ago, as they seek to understand the interaction with policymakers.