NBIM’s RI report showcases benefits of transparency

Norges Bank Investment Management, asset manager of Norway’s Government Pension Fund Global, has spent much of the last year increasing transparency, convinced that sharing its actions and progress, providing more information on its investments, participating in more consultations and engaging in more dialogue with companies and stakeholders, is key to building the trust needed to achieve the energy transition.

“We hope that this transparency and visibility can contribute to companies, investors and policy makers pulling in the same direction, and that, in this way, we can achieve more than we would on our own. But we also hope that our transparency in this report can increase the public’s understanding of and engagement with our work. Engagement, discussions, and input help us to improve and to continue to be a leading responsible investor,” says Carine Smith Ihenacho, chief governance and compliance officer at NBIM, encouraged that the investor’s work is helping support the rise in sustainability-related shareholder proposals.

Her comments accompany the publication of NBIM’s latest Responsible Investment Report that showcases key milestones over a year when the investor was also recognized as the most transparent fund in the Global Pension Transparency Benchmark, next published in October 2024.

Pressure on companies

The report highlights how NBIM has put increasing pressure on the companies in its portfolio to transition to reach net zero by 2050.

“Long-term targets are no longer sufficient, they must be underpinned by detailed transition plans with interim targets and updates on their progress,” it states.

“We expect large emitters to set net zero targets with urgency and all companies to set targets by 2040.”

NBIM as rolled out an ‘engage-to-change’ approach with many more companies through 2023. Although NBIM says it is still early to evaluate results, it observes encouraging changes.

It states 2,385 portfolio companies had set science-based net zero 2050 targets at the end of 2023, a rise of 790 on 2022, meaning 68 per cent of its financed emissions are now covered by net zero 2050 targets, a key metric defined in the plan.

Engaging with regulators and frameworks

NBIM spent much of the year engaging with regulators and contributing to shared frameworks. Last year marked the finalisation of several long-awaited standards and outcomes, and the adoption of mandatory reporting regimes across several of the markets NBIM invests.

The most important milestone was the publication of the International Sustainability Standards Board (ISSB) standard for climate-specific disclosures.

Looking ahead, NBIM will increase its focus on engaging with regulators and frameworks in emerging markets particularly India and Brazil where it has responded to consultations and met local standard setters including securities regulators and stock exchanges.


NBIM has also measured the impact of its investment decisions, including risk-based divestments, on its returns. The impact on the equity portfolio from the risk-based divestments was 0.07 per cent in 2023.

Since 2012, risk-based divestments have increased the cumulative return on equity management by 0.44 per cent, or 0.02 per cent annually.

Risk-based divestments linked to climate change and human rights have increased the cumulative return on equity management by 0.23 and 0.09 per cent respectively.

Funding research

Last year, NBIM begun funding research for the first time. Like its exploration into CEO incentives where it aims to better understand what optimal executive incentives look like for a diversified investor seeking to promote long-term returns. NBIM is partnering with the National Bureau of Economic Research (NBER) in the US to encourage further academic research by top scholars on the area.

In another initiative, it is seeking answers on the relationship between climate change and natural resource availability. Working with the University of Minnesota it seeks to estimate the future economic impact of changes to natural resources on countries and industry sectors, seeking a more complete picture of how changes to natural resources might affect the fund’s investments, particularly in areas such as food production, infrastructure, and renewable energy, as well as in countries whose economies depend significantly on natural capital.

Insights from another research project have just come to light. Since January 2021, NBIM has disclosed how it intends to vote prior to annual shareholder meetings. The latest analysis of whether pre-disclosure transparency has any effect on other shareholders’ voting decisions suggest that voting pre-disclosure influences other shareholders’ voting decisions.

“Market participants seem to find our pre-disclosure valuable and, more generally, it shows how voting pre-disclosure can be an effective ownership tool for us.”


In 2023 NBIM developed a portfolio-specific governance dashboard and expanded the use of an investment simulator, a decision-support framework which highlights strengths and weaknesses in portfolio managers’ investment decisions. Elsewhere, a forensic accounting team has developed a screening tool looking at more than 100 accounting ratios to help us identify companies where sources of revenue or cash flow may be unsustainable.

Building on this accounting database, the team is developing an AI tool which seeks to identify companies where it should scale back on its investment. Last year NBIM also launched a net zero target tracker. It stores information on all corporate net zero targets published in its portfolio companies, including short- and medium-term targets. It shows that the highest increase in companies setting targets in 2023 was in the Pacific region.

Moreover, the research indicates that targets matter for corporate emissions. “We are seeing increased emissions in companies that have not set any targets, whereas companies with science-based targets have decreased their emissions since 2015.”


NBIM has developed a screening methodology for assessing ESG risks across all companies in the equity portfolio and benchmark index on a quarterly basis. The purpose is to assess the potential financial impact of ESG risks on companies, as well as the companies’ potential and actual adverse impacts on the environment and society.

The screening feeds into its sustainability due diligence processes. In 2023, NBIM identified 166 companies with heightened ESG risk through its screening method. Following additional analysis, it decided to monitor developments in 49 cases, initiate dialogue in 28 cases and divest in 4 cases.

Both divestment and re-inclusion decisions are made within the overall limit for deviation from the benchmark index. The use of this tool is typically chosen for selected small investments where it has uncovered systematic mis-management of ESG risks, and where engaging with the company has failed or is unlikely to succeed.


NBIM also revealed progress around its strategic board dialogues.

Dialogue is based around net zero dialogues, where it engages with the highest emitters in the portfolio and supports and challenges them on their pathway to net zero emissions. Thematic dialogues involve engagement with companies on specific sustainability matters and incident-based dialogues involve working with companies because of poor risk management.

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