By Amy Owens

The report, Ambition Under Pressure: Analytical Leadership vs. Strategic Hesitation, examines what the climate risk strategy of Norges Bank Investment Management (NBIM), manager of Norway’s Government Pension Fund Global, reveals about the way financial markets are pricing climate risk.

It finds that NBIM has built one of the most advanced climate and nature risk frameworks among global asset owners. Its internal modelling goes beyond many market-standard tools, enabling the fund to assess systemic physical climate risk, climate-nature interdependencies and potential macro-financial spillovers across its portfolio.

But NBIM’s analysis also points to a wider market problem: commonly used climate risk models may be materially understating the scale, timing and systemic nature of physical climate losses. Under comparable temperature pathways, NBIM’s own stress testing indicates that climate-related losses could be several times higher than those suggested by commonly used bottom-up models.

The report reveals that physical climate risk is already a valuation issue.  A quarter of NBIM’s equity portfolio by value is exposed to severe physical climate hazards, with business interruption emerging as a major source of potential financial loss.

NBIM is now moving beyond a transition-focused approach towards one centred on physical climate risk, adaptation and resilience. However, Carbon Tracker finds that this analytical progress has not yet translated into major changes in investment strategy, such as portfolio-wide capital allocation signals, interim targets or clearer sector-specific expectations.

The report argues that this gap is shaped by policy uncertainty and by the investment mandate administered by the Norwegian Government, showing how climate policy uncertainty is becoming financially material for large, diversified, long-term investors.

The report draws on other research reports challenging the under-pricing of climate damages in financial decision-making, including Carbon Tracker’s Recalibrating Climate Risk (2026) and  Loading the DICE Against Pensions (2023) reports.

Carbon Tracker calls on investors to account for these risks more directly in portfolio decisions and on policymakers to provide clearer, more consistent policy signals.

Get the report here