Norway’s Norges Bank Investment Management (NBIM) has published revised expectations that aim to support companies by providing guidance on how they manage the evolving climate-related risks and opportunities.

The investment manager, which is responsible for the investments of Norway’s Government Pension Fund Global, outlined six core expectations that apply to all companies it invests in and will directly inform NBIM’s voting decisions.

Furthermore, the expectations provide further direction on good practices that NBIM encourages companies to adopt.

The core expectations include board oversight, with NBIM expecting company boards to ensure climate risks and opportunities are integrated into corporate strategy and risk management, and to be transparent on disclosures about governance structures, mechanisms and activities.

On climate risk disclosures, NBIM expects companies to analyse and disclose the way in which climate risk could impact their operations, value chains and demand for their products, and it also expects companies to report on scope 1, 2 and 3 greenhouse gas emissions.

Companies should have committed to net zero by 2050 and align their activities with the objectives of the Paris Agreement, NBIM stated, and they should set science-based interim emission reduction targets that cover scope 1, 2 and material scope 3 emissions, consistent with net zero by 2050.

Finally, NBIM’s core expectations outlined that companies should implement time-bound and quantified transition plans, designed to deliver on their interim emission reduction targets, and annually disclose progress against pre-established and consistent key performance indicators.

“With the effects of climate change becoming more evident, we really saw the need to sharpen our expectations,” commented NBIM chief governance and compliance officer, Carine Smith Ihenacho.

“We look forward to having even more valuable engagements with companies and their boards on this important topic.

“We think the core expectations will be particularly useful in our board level dialogues.”

NBIM lead investment stewardship manager, Tim Smith, added: “Many companies now need to move on from disclosures and target setting to the execution phase.

“They need to show investors credible transition plans and explain how they will ensure delivery.”

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