Subscribe to receive updates on Norway’s Oil Fund for free.
You will receive a daily email digest, called myFT Daily Digest, summarizing the latest news on Norway’s Oil Fund each morning.
The CEO of the world’s largest sovereign wealth fund has expressed concern about the spread of political resistance to climate and environmental measures from the US to the UK.
Nicolai Tangen, the CEO of Norway’s $1.4tn oil fund, stated in an interview with the Financial Times: “A new development this summer is the ESG [environmental, social, governance] backlash in the UK, following the Uxbridge vote. That’s concerning. We have a major European country that is impeding progress on climate action when it’s more crucial than ever.”
Last month, the UK’s opposition Labour party lost a by-election in the Uxbridge constituency, despite being ahead of the ruling Conservatives in many national polls.
Both parties interpreted this outcome as a sign of voter dissatisfaction with green policies. Earlier this year, London’s Labour mayor, Sadiq Khan, expanded the vehicle emissions charges to outer London to improve air quality.
Tangen emphasized that climate change poses an increasing financial risk and should not be a political matter. He said, “To me, climate is as apolitical as gravity. It shouldn’t be a political issue. I fail to understand how it became one.”
Norway’s oil fund is an influential investor globally, with ownership of over 2.5% of every listed company in Europe on average. Its funding comes from the country’s oil and gas revenues.
Under Tangen’s leadership, the fund has been exerting more pressure on companies it holds shares in to address climate change. This includes filing shareholder proposals at annual meetings and publicly denouncing the ESG backlash that originated in the US.
The former hedge fund manager highlighted the increasing financial risk posed by climate change, including the impact of rising temperatures on crop productivity and resulting inflation in food prices. “This summer, we’ve gone from global warming to global boiling. There’s now a much stronger link between climate and inflation. That’s why it’s a legitimate financial risk. We need to accelerate efforts to combat climate change,” Tangen said.
Tangen also shared the fund’s stance on artificial intelligence (AI). The fund is urging its 9,000 portfolio companies to ensure accountability at the board level, transparency in AI design and usage, and careful risk management.
This year, the fund has already doubled the number of meetings with portfolio companies to discuss AI, holding 166 meetings by May compared to 177 for the whole of 2022.
Tangen remarked, “Boards are not adequately equipped to handle this. If you fail to see the opportunities presented by AI, then you are ignorant.” He added that AI had already improved the fund’s trading operations internally, with a goal of increasing productivity by 10%.
Tangen noted that implementing global regulations for AI would be challenging due to its role in various races between the US and China, including weapons development, medical advancements, self-driving technology, and financial competition.
The fund’s focus on key investments was evident in the first half of this year, as seven companies (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla) accounted for a third of its gains. These companies now represent 12% of the fund’s portfolio.
Carine Smith Ihenacho, the fund’s Chief Corporate Governance and Compliance Officer, highlighted the fund’s scrutiny of sectors such as healthcare, consumer goods, and retail financial companies to ensure responsible use of AI, in addition to the tech industry.
Additionally, the fund announced a 10% return in the first half of 2023, driven by a rebound in equity markets. This improvement followed one of the fund’s worst performances in 2022.
Denial of responsibility! VigourTimes is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
