Norway’s Norges Bank Investment Management (NBIM), which is responsible for the investments of the Government Pension Fund Global, has published its 10th annual report on responsible investment, detailing its sustainability and active ownership work during the year.

During 2023, NBIM outlined its expectations for how companies it invests in should navigate the climate transition and increased the scale of its risk-based divestments.

According to the report, NBIM addressed climate risk at more than 800 company meetings last year and observed “a positive trend”.

More than two-thirds (68 per cent) of emissions in the fund were from companies with net-zero targets, up from 56 per cent in 2022.

Furthermore, NBIM’s pre-screening of companies entering its benchmark index and risk-based divestments also increased in scale in 2023.

The investment manager pre-screened more than 1,000 companies that came into its index and decided against owning 54 of them.

It divested from 86 companies during the year due to “high environmental and social risks”.

According to NBIM, these investment decisions have contributed NOK 10bn to fund returns since 2012.

"An increasing number of companies have targets and transition plans,” commented NBIM chief governance and compliance officer, Carine Smith Ihenacho.

“However, there is still a way to go before we reach our goal of net-zero targets and transition plans for all the companies in the portfolio."

NBIM’s report also noted that 2023 marked the year when artificial intelligence (AI) became a part of everyday life.

It said that while AI has vast potential, it also poses risks for companies, consumers and society.

Responsible use of AI begins with board accountability, the investment manager stated, and also depends on transparency, explainability and robust risk management.

“We want to support the companies, but we also want to be clear voice and actively address current issues concerning the companies we invest in,” Smith Ihenacho added.

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