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Norway’s $1.2 Trillion Investment Fund Sets 2050 Net Zero Target

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A huge government fund that invests Norway’s oil revenues said Tuesday it would step up efforts to persuade companies to cut carbon dioxide emissions by 2050.

This is the first time the $1.2 trillion fund has set a deadline for the companies it invests in to become “net zero.” This means that companies emit no carbon or offset their emissions by removing an equivalent amount of carbon from the atmosphere. His 2050 goal is to invest in his over 9,000 company-backed funds around the world and BlackRock and Many other large asset managers.

To keep the temperature of the atmosphere below 1.5 degrees Celsius (2.7 degrees Fahrenheit) above pre-industrial levels (a key goal of the Paris Agreement), scientists need net zero emissions by 2050. I’m calculating.

“Without the right climate ambition, there is no business,” Nicolai Tangen, CEO of the Norwegian fund, said in an interview before the climate strategy was announced. No coverage, no insurance coverage, no customers, no people to work for you.”

The Norwegian fund, like other big investors, is asking companies to come up with credible plans to cut emissions. Many large companies have net-zero plans in place, but they may lack detail or ambition. In such cases, funds often put pressure on management and boards to do more. On Tuesday, a Norwegian fund said it would sell companies deemed laggards, “particularly those whose engagements have failed or are unlikely to succeed, from those whose climate risks have not been mitigated.” Stated.

The Norwegian fund is adding pressure even as investors face the challenge of climate action.

Over the past year, soaring oil and gas prices have revitalized energy company profits and stock prices, highlighting that fossil fuel extraction can still be an economically viable business. Additionally, oil and gas shortages, largely as a result of Russian actions and the war in Ukraine, are pushing energy companies to produce more, not less.

The efforts of large asset managers to tackle climate change are also facing growing political opposition from Republicans. Republicans argue that big investment firms use their influence to promote progressive policies.

Florida Republican Gov. Ron DeSantis said, “Corporate elites, from Wall Street banks to large asset managers and tech giants, are using their economic power to push policies to the country that they could not have voted on.” I’ve seen them impose.” said this summer.

Still, large investment funds may decide to keep stakes in the most carbon-emitting companies for years. As shareholders, they can push for more ambitious climate plans and deliver the biggest reductions in emissions. In theory, the big oil companies would have enough money to invest in technologies that would help reduce emissions, such as the currently very expensive attempts to suck carbon out of the atmosphere. increase.

“Large integrated energy companies are exactly the solution here,” Tangen said.

The Norwegian fund will continue to increase its investment in renewable energy companies and projects. But Tangen said the fund has struggled to find attractive investments in this area.

“The competition is very fierce,” he said. “So the profit you get is very, very low.”

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