Norway raises ambition, but not the bar on renewable energy
Although the government mandated the country’s sovereign wealth fund to invest more in environmentally-related stocks, the directive does little to increase the actual impact of those investments with regard to renewable energy.
Norway announced that stock investments made by the fund will grow from approximately $5 billion to approximately $8.4 billion under the new mandate. This is despite recent announcements from the prime minster linking the fund’s investment changes to action on climate change.
“WWF expected the government to deliver something big on the sovereign wealth fund, particularly in light of its failure to act elsewhere on climate change,” says Nina Jensen, CEO of WWF-Norway. “The government has raised ambition on the fund through its platform and the prime minister’s statements. We and others supported that level of ambition but now we see it was an empty promise.”
Last month, Norway announced that it would mandate the country’s sovereign wealth fund, the world’s largest state fund, to invest in renewable energy. Today’s announcement came amid expectations that Norway would extend the existing mandate from stocks to include infrastructure, in order to allow for the $838 billion fund to directly finance projects like solar and wind farms.
Norway’s announcement comes at a time when any delay at a global scale can redefine the trajectory of climate change. Last week, the Intergovernmental Panel on Climate Change highlighted the tragic impacts that could accompany climate change. Next week, the same group of experts will meet in Berlin where it is expected they will say that changing global energy systems toward renewables is the main way to tackle the climate challenge.
“This was Norway’s chance to deliver on climate change, the same week that world scientists have released their report on intense impacts of climate change,” says Samantha Smith, Leader of WWF’s Global Climate & Energy Initiative. “Norway knows what it has to do, and how to do it, but today’s announcement doesn’t reflect that.”
While it was hoped that Norway would direct more money from the state fund toward renewable energy, today’s move falls far short of expectations. A commitment of up to 5% of the fund toward renewables could have been a scale large enough to cause ripple effects on renewable energy investment around the world.
“Every decision Norway makes on this fund sends signals around the world,” says Nina Jensen. “Norway can make a huge difference in the world, and this announcement falls short of meeting expectations of the people of Norway and of the world.”
While Norway did not set aside a specific amount for renewable investment, today’s directive requests the fund’s manager, Norwegian Bank Investment Management, to review and report on the success of new investments made by the pension fund.