Norway’s GPFG should join the Net-Zero Asset Owner Alliance

Economists and experts from around the world call for action

For the world to successfully mitigate climate change, decisive action by governments and the private sector is essential. Large institutional investors, such as pension funds, insurance companies and sovereign funds, will need to reduce their total portfolio carbon emissions towards net zero by 2050 or sooner.

Through membership in the United Nations-convened Net-Zero Asset Owner Alliance, 42 institutional investors, representing $6.6tn assets under management, have committed to doing so, with the first intermediate targets set for 2025. Meanwhile, 128 asset managers, representing $43tn assets under management, have joined the Net-Zero Asset Managers Initiative, to support investing aligned with net-zero emissions by 2050 or sooner.

The Norwegian Government Pension Fund Global’s total asset holdings are about three times the size of Norway’s gross domestic product. The GPFG equity portfolio carbon footprint of 107.6m tonnes of CO2 equivalents (MtCO2e, 2019) is more than twice the amount of Norway’s annual total emissions, and triple when excluding Norway’s emissions during oil and gas extraction. Despite this, GPFG does not have specific emissions targets and has focused primarily on climate risk rather than climate impact. Country-level measurement of greenhouse gas emissions, which is standard under international agreements, significantly understates Norway’s climate impact.

The Norwegian economy, due to its concentration in the oil and gas sector, is highly exposed to climate transition risk. A share of GPFG’s portfolio assets is emissions-intensive and therefore highly exposed, increasing the overall transition risk to Norway’s productive and financial assets.

GPFG, which represents $1.3tn assets under management, owns on average 1.4% of the world’s listed companies. This makes GPFG one of the world’s largest investors, and its adherence to the Net-Zero Asset Owner Alliance would be a significant step towards achievement of the objectives in the Paris agreement. GPFG is also a highly influential investor, and its adherence would set an important precedent for other sovereign funds.

As leading economists and experts from around the world, we have come together to urge the Norwegian government and parliament to sign up the GPFG to net zero. Guided by sound economic principles, we are united in the following policy recommendations.

  • For Norway to be consistent about its climate ambitions, GPFG’s investments should be in line with Norway’s climate goals. This would require the establishment of concrete and ambitious emissions targets for GPFG.
  • GPFG exists to safeguard Norway’s extracted petroleum fortune for future generations. Its investments should contribute to the conservation of the climate that these generations will live in.
  • Norway can provide GPFG with a climate-aligned mandate, while also maintaining its independence as a commercial investor.
  • Norway can reduce its overall exposure to climate transition risk by bringing down the greenhouse gas emissions intensity of the GPFG portfolio.
  • In accordance with the Paris Aligned Investment Initiative, Norges Bank Investment Management, which manages the GPFG, should prioritise engagement and stewardship as the primary mechanism to drive climate alignment, with portfolio construction and selective divestment as complementary tools.
  • As one of the world’s most influential investors, NBIM should align its global voting guidelines with the objective of reducing total portfolio carbon emissions to net zero by 2050 or sooner.

We urge the Norwegian government and the Storting (parliament) to take the opportunity of COP26 to announce the GPFG’s membership of the Net-Zero Asset Owner Alliance.


Christiana Figueres, Founding Partner, Global Optimism; former Executive Secretary of the United Nations Framework Convention on Climate Change

Pierre-Richard Agénor, Hallsworth Professor of International Macroeconomics and Development Economics, University of Manchester

Jørgen Juel Andersen, Associate Professor, Department of Economics, BI Norwegian Business School

Arild Angelsen, Professor, School of Economics and Business, Norwegian University of Life Sciences (NMBU)

Geir B Asheim, Professor, Department of Economics, University of Oslo

Olivier Blanchard, Robert M Solow Professor of Economics, Massachusetts Institute of Technology; former Chief Economist, International Monetary Fund

Patrick Bolton, Barbara and David Zalaznick Professor of Business Finance, Columbia University

François Bourguignon, Emeritus Professor, Paris School of Economics; former Chief Economist, World Bank

Ben Caldecott, Director, Oxford Sustainable Finance Programme; Lombard Odier Associate Professor, University of Oxford

Otaviano Canuto, former Vice President and Executive Director, World Bank; former Executive Director, IMF

Gordon L Clark, Professorial Fellow, St Edmund Hall, University of Oxford

Diane Coyle, Bennett Professor of Public Policy, University of Cambridge

Adam Dixon, Associate Professor of Globalization and Development, Maastricht University

Francis Fukuyama, Olivier Nomellini Senior Fellow, Freeman Spogli Institute for International Studies; Mosbacher Director, Center on Democracy, Development and the Rule of Law, Stanford University

Mads Greaker, Professor, Oslo Business School, OsloMet

Kirk Hamilton, Visiting Professor, London School of Economics

Bård Harstad, Professor, Department of Economics, University of Oslo

Cameron Hepburn, Director and Professor, Environmental Economics, University of Oxford

Justin Yifu Lin, Dean, Institute of New Structural Economics and Institute for South-South Cooperation and Development, Peking University; former Chief Economist, World Bank

Diderik Lund, Professor Emeritus, Department of Economics, University of Oslo

Klaus Mohn, Rector and Professor of Economics, University of Stavanger; former Chief Economist, Statoil (now Equinor)

Ashby Monk, Executive Director, Stanford Global Projects Center, Stanford University

Knut Anton Mork, Professor Emeritus, Department of Economics, BI

Ståle Navrud, Professor, School of Economics and Business, NMBU

Karine Nyborg, Professor, Department of Economics, University of Oslo

Rick van der Ploeg, Professor, Department of Economics, University of Oxford

Steven Poelhekke, Professor and Head of Department, Economics, University of Auckland

Jørgen Randers, Professor Emeritus of Climate Strategy, BI

Knut Einar Rosendahl, Professor, School of Economics and Business, NMBU

Jeffrey D Sachs, University Professor and Director, Center for Sustainable Development, Columbia University; President, United Nations Sustainable Development Solutions Network

Lord Nicholas Stern, IG Patel Chair of Economics and Government, Professor, Department of Economics, LSE; former Chief Economist, World Bank

Per Espen Stoknes, Associate Professor, Department of Law and Governance, BI

Tony Venables, Senior Research Fellow, University of Oxford; Professor of Economics and Research Director, The Productivity Institute, University of Manchester

Louis Wells, Herbert F Johnson Professor of International Management, Harvard Business School

Håvard Halland, author and organiser of this statement

This article was originally published in Global Public Investor 2021.

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