Norges Bank Investment Management (NBIM), responsible for the investments of the Government Pension Fund Global, has outlined plans to further strengthen its management of climate-related risks, raising concerns that policy shifts could be increasing the odds of a disorderly transition. 

NBIM's 2030 Climate Action Plan emphasised that climate risk is a financial risk, with the group's modelling showing that there is a risk of meaningful losses at the portfolio level even under the current emissions trajectory of the global economy, with climate tipping points posing an additional threat.

“Climate risk is financial risk," NBIM CEO, Nicolai Tangen, said. "Our long-term returns depend on how the global economy manages physical climate risk and the energy transition. The global economy cannot outrun climate change, so neither can our investments."

Given this, NBIM’s 2030 Climate Action Plan set out five priorities designed to support an orderly transition to net zero emissions by 2050.

These include strengthening the link between investment objectives and climate goals; engaging with companies to ensure credible climate targets and transition plans; promoting global standards for climate and nature-related disclosures; enhancing focus on nature, adaptation, and physical climate risk; and using artificial intelligence and analytics to improve climate risk management and reporting.

In particular, NBIM said that engagement-led action will be at the "heart" of its efforts, as it looks to support and challenge portfolio companies to transition their business models to net zero emissions by 2050.

Indeed, NBIM said that it will engage with companies to support corporate net zero and interim targets covering scope 1, 2 and 3 emissions, with high emitters expected to set net-zero 2050 targets as a matter of urgency.

As part of this, NBIM will update its climate focus list to include companies representing around 70 per cent of its scope 1 and 2 financed emissions, those with the highest scope 3 emissions, and further companies with heightened vulnerability to physical climate and nature risk.

Board-level discussions on climate are planned for companies on this list.

“We will continue to support and challenge our portfolio companies to decarbonise their operations and business models,” NBIM chief governance and compliance officer, Carine Smith Ihenacho, said.

NBIM also stressed the need for adaptability in its plans, however, admitting that climate policy globally has not tightened uniformly in the way that was envisaged after the Paris Agreement, with policy instead promised, delivered, and removed, in waves. 

It also pointed out that the costs and competitiveness of climate change mitigation technologies have not advanced at a uniform rate, as in certain industries, there are still competing pathways to decarbonisation.

"Policy support for climate change mitigation, in all countries, and always, cannot be taken for granted," it added, warning that this raises the prospect of a disorderly transition, driven by policy delay and divergence globally. 

NBIM highlighted this as a reminder that the most important factor in the delivery of global climate goals is the formation of government policy, and confirmed that it will keep its own plans under review, with another updated climate action plan for the next five-year period expected in 2030.

“We will remain vigilant in identifying new signs of physical climate risk and will adapt our approach to companies’ specific business environments,” it said.

Alongside market-level engagement efforts, NBIM outlined plans to increase its investments in renewable energy infrastructure, subject to market opportunities, with a specific focus on renewable electricity generation and storage, electricity grids, and renewable energy infrastructure funds.

The fund also committed to ensuring no net loss of nature from new renewable energy investments, a move it said would enhance long-term value creation and resilience.

Looking back, the fund reported significant progress against its 2025 Climate Action Plan, revealing that the proportion of portfolio company emissions covered by science-based net-zero targets has risen from 57 per cent to 76 per cent. 

In addition to this, the number of portfolio companies with science-based net zero targets more than doubled from 12 per cent to 34 per cent. 

Between 2022 and 2024, the fund’s financed emissions and weighted-average carbon intensity declined by 5 per cent and 11 per cent, respectively, while the net asset value of the fund increased by 24 per cent.

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