• 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.

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