Photo: Wikimedia Commons
Key Points
- Norway’s oil fund, NBIM, has not applied its framework for measuring climate and nature risk into moving away from fossil fuels, a report from Carbon Tracker finds.
- The mismatch is due to a mandate limit, political expectations, and an increasingly uncertain global climate policy environment.
- The findings reveal the limits of voluntary investor action.
Norway’s oil fund (NBIM) has developed one of the most advanced frameworks for measuring climate and nature risk, but it has yet to apply those insights to shift strategy and move capital away from fossil fuels, according to a new report about the world’s biggest asset manager.
The report into NBIM by independent financial think tank Carbon Tracker shows that financial markets may be significantly underestimating the true scale and immediacy of climate risk, with a quarter of NBIM’s equity portfolio already exposed to severe physical climate hazards.
However, Carbon Tracker highlighted a growing discrepancy between insight and action at NBIM, which has over US$2.3tn in assets and holds about 1.5% of the world’s listed companies.
“NBIM’s analysis shows that physical climate risk is already a valuation issue. But there is a gap between what the data shows and what the fund feels able to do in response. That raises important questions for investors and policymakers alike,” said Amy Owens, financial policy analyst at Carbon Tracker.
Carbon Tracker said this mismatch was due to many factors: mandate limitations, political expectations, antitrust considerations and an increasingly uncertain environment for global climate policy.
“These constraints materially influence the scope and pace of strategic action, underscoring the financial relevance of policy risk for large, diversified, long-term investors,” the report said. “Growing climate policy uncertainty is itself becoming financially material for long-term investors.”
NBIM investment in fossil fuels
NBIM, which is bound by a mandate from the Norwegian parliament that focuses on maximising returns, is still a major investor in fossil fuels, although it says it is working to encourage the companies it invests in to align their operations with the goals of the Paris Agreement.
In 2024, German environment NGO Urgewald said Norway’s oil fund was Europe’s largest fossil fuel investor with investments of over US$70bn.
NBIM says 23% of its equity portfolio by value is exposed to severe physical climate hazards already today. It currently has shareholdings in about 7,200 companies
Carbon Tracker noted that NBIM’s ability to influence companies it invests in is limited by its mandate from the Norwegian government and the political contexts of the countries in which it invests, compounded by the current global backlash against more ethical investing.
“Taken together, these dynamics leave NBIM operating within a narrow corridor of influence. It must balance stewardship ambitions with legal, political and market structure constraints that restrict how far it can push individual companies or broader market standards,” the report said.
Dina Rui, from the Nordic Center for Sustainable Finance, said it was up to the Norwegian parliament to steer the oil fund away from fossil fuels, noting that the fund continues to buy bonds in oil and gas companies funding new exploration like TotalEnergies.
“It’s up to the parliament to direct them to exclude fossil fuel companies,” she said.
Limits of voluntary investor action
In April, NBIM came under fire when it said it would vote in favour of the election of the chair of oil major BP and other board-supported resolutions, while opposing a shareholder resolution seeking extra disclosures on how BP’s capital allocation, including oil and gas spending, aligns with shareholder value.
The number of companies NBIM engaged with on climate issues fell 11% in 2025, according to its climate and nature risk disclosures. Carbon Tracker noted the fund had softened its language on the impact of its engagement on corporate practices.
Last November, the Norwegian government announced it had set up a committee to review NBIM’s ethical framework after a heated debate over its investments in Israeli companies and global tech giants. The committee is due to report back by Oct. 15.
That has resulted in the temporary suspension of NBIM’s powers to exclude or divest from certain companies, including on the basis of climate or nature-related concerns.
Carbon Tracker said its report into NBIM show that voluntary investor action alone is insufficient to address the scale and nature of climate risk.
“Policymakers and regulators therefore have a central role to play, especially in countries which have ambitious emissions reduction targets and climate policies,” it said. “Clearer policy signals and more robust supervisory frameworks are essential to reduce market-wide mispricing of climate and nature risks.”
This page was last updated June 5, 2026
Written by
Emma Thomasson is a British journalist, consultant and trainer based in Berlin. She is an expert in economics, politics, business and technology. She previously worked for Reuters as a correspondent and bureau chief in Germany, Switzerland, the Netherlands, South Africa and the UK.
