Norway's oil fund steps up ESG focus in real estate

World's largest sovereign wealth fund wants to improve its sustainability strategy for the USD 30bn property portfolio.

Oil fund CEO Nicolai Tangen | Photo: Tony Colli/PR

The sovereign wealth fund of Norway says it’s working on a strategy update to ensure its USD 30bn property portfolio lives up to the carbon neutrality goals mapped out in the Paris Agreement.

"It’s time to walk the talk more," said Mie Holstad, who oversees real assets at Norges Bank Investment Management.

"What we’re working on now is a separate, improved sustainability strategy, which prepares us for net-zero as well as new laws and regulations surrounding carbon emissions", she said.

Pressure is building on asset managers and asset owners to cut their carbon footprint as scientists warn that time is running out to prevent a cataclysmic rise in global temperatures. A recent review of the Norwegian wealth fund’s investment mandate pointed to real estate as an area that holds hidden climate risks. Other sectors in which climate risk is poorly understood include banking and insurance, the review found. 

Holstad says the Oslo-based wealth fund has well defined policies around environmental, social and governance investing that mean she’s confident the property portfolio is already prepared for the risks ahead. Before any acquisition, the fund screens potential targets for ESG risks, she said. 

Though Norway hasn’t formally signed its wealth fund up to net-zero goals, Carine Smith Ihenacho, its chief corporate governance officer, said last month that "as a fund, it’s clearly in our interest that the goals in the Paris Agreement are reached. And that includes net-zero emissions by 2050".

Ex-PKA boss calls for green unity ahead of Climate Investment Summit 

Investors face 'transitional shock' as climate crisis hits

Carnegie launches infrastructure fund to capture paradigm shift 

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