"Norges Bank Alters Investment Decisions": Reversing Previous Disinvestment Plans
Norges Bank Investment Management (NBIM), the asset management arm of Norway's Government Pension Fund Global, has revealed its approach to divestment decisions and the reasons behind reversing them.
With $1.8 trillion in assets under management, NBIM holds investments in nearly 9000 companies across 70 economies. Since 2012, the fund has announced 575 divestments, of which 195 are related to climate change. Reasons for these divestments include unsatisfactory climate risk management, high GHG emissions, coal mining, coal-based electricity generation, biodiversity, water management, and 'significant sustainability risks.'
However, improved climate risk management over several years has been a key factor in NBIM's decision to reverse divestments. In 2024, the fund reversed the divestment decisions for 16 companies, bringing them back into its investment universe.
Climate change related divestments have shown to increase the fund's return on equity by 0.30 percentage points. NBIM's divestment decisions are financially prudent, with divestments increasing the cumulative return from the fund's equity portfolio.
The latest responsible investment report from NBIM details that by 2024, 74% of NBIM's portfolio emissions were covered by net zero targets. The fund has also increased its allocation to renewables amid rising capital costs.
It's worth noting that NBIM's divestment decisions can be financially motivated or ethically motivated (exclusions). More recently, NBIM announced divestment from six companies linked to Israeli settlements on ethical grounds in 2025, based on assessments of breaches of international law and corporate involvement.
However, the effectiveness of divestment by NBIM, as demonstrated by any reversal of divestment decisions, is not supported with evidence in the provided sources. The fund’s practice instead reflects measured divestment decisions supported by ethical reviews without publicly known reversals.
Three 'Asian industrial companies' that were divested from by NBIM in 2014 were among the companies brought back into the fund's investment universe in 2024. NBIM also has a policy for selling companies that do not meet its climate expectations. In 2024, there were 49 risk-based divestments by NBIM.
In conclusion, NBIM's approach to divestment and reversal of decisions is a strategic move that aims to incentivize companies to improve their climate risk management, while also being financially prudent. However, the effectiveness of divestment as a whole remains a topic of debate, with further research needed to fully understand its impact.
[1] Source [2] Source [3] Source [4] Source
- Although NBIM divested from certain Asian industrial companies due to climate-change concerns in 2014, the improved climate risk management of these companies led NBIM to reverse their divestment decisions in 2024.
- NBIM's decision to invest in environmental-science companies that focus on renewable energy sources can be seen as a part of their business strategy, aiming to mitigate the impacts of climate change while also providing financial returns.
