The Norwegian government has hired Mercer, the investment consultant, to carry out a research project examining the implications of climate change on institutional investment and the strategy of the €260bn Norwegian Government Pension Fund. Last month, the government outlined plans that could see it allocate a huge NOK20bn (€2.3bn) portion of the assets of the fund into environmental investing and a potential programme aimed at sustainable growth assets in emerging markets over five years. At a conference in Oslo this morning (June 3), Kristin Halvorsen, Norwegian Minister of Finance, said the project carried out by Mercer would include a broad assessment of the impact of climate change on financial markets, as well as the asset allocation implications for strategic asset allocation in the government fund.

Halvorsen said: “More specifically, the project aims to develop a methodology for conducting scenario analyses, and to identify risks to long-term financial investments, across asset classes and geographical locations.”

She called on other global investors to join the project: “Traditional strategic asset allocation modelling approaches have not taken climate risks, or opportunities, sufficiently into account. This project seeks to address that gap. This is an ambitious and complex task, which is more efficiently undertaken in collaboration with others. I will therefore encourage large institutional investors and industry thought leaders worldwide to join forces in this project. Together we need to develop the tools and critical thinking that is required to understand the financial implications of climate change.”

Halvorsen said the government would also strengthen the focus on engagement with companies over climate change issues via Norges Bank, which runs the government pension fund assets: “Together, it is my hope that these measures will position the fund among the leading funds internationally in this area, and that we will inspire other investors to address the issue of climate change.”