Norges Bank Investment Management (NBIM), which is responsible for the investments of the Government Pension Fund Global (GPFG), has revealed it has refrained from investing in nine companies this year following pre-screening of more than 400 companies.

In May this year, NBIM announced that it would begin to systematically assess the sustainability risk of companies that enter the fund’s equity index. Since it started this work in June, it has assessed 442 companies that were added to the index – a process it calls pre-screening. As a result, it has chosen to refrain from investing in selected companies that it believes will increase the fund’s financial risk in the long term.

The fund’s analyses uncovered risks related to inadequate management of environmental pollution and human rights and concluded that nine companies could add financial risk to the fund in the long term. During the second half of the year, it also identified an additional 65 companies with high sustainability risk that it will consider following up through its investment processes and in its ownership work.

"Our pre-screening builds on and strengthens our long-standing work with risk-based divestments. It’s about weeding out companies that we do not want to be invested in. In addition, pre-screening gives us a better overview of the sustainability risk in the companies that we choose to invest in at an earlier stage,” NBIM CEO, Nicolai Tangen, said.

As part of the screening, NBIM has performed a mapping of companies in markets and sectors with particular challenges relating to the environment and to working conditions. NBIM chief risk officer, Dag Huse, said the process was an “important but challenging job”.

"This work has illustrated that the quality and availability of sustainability data for companies that are added to the index is generally low. Most of these companies are small, and many have only recently been listed.”

In addition to the nine companies that NBIM chose to refrain from investing in, it divested from 43 companies this year that it considers not to have sustainable business models. This includes companies exposed to significant risks related to climate change, water management, and corruption. Since 2012, NBIM has divested from 366 companies that it considers not to have sustainable business models.

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