With a population of just 4.6 million, Norway can't hope for more than modest political influence when it comes to combating global warming. But it can use its leverage in the boardroom to advance the country's favorite cause. Norway controls the largest sovereign wealth fund (SWF) outside the Middle East, worth $435 billion, and the pot is growing fast. A timely decision to raise the proportion of equities in the portfolio allowed the Government Pension Fund, which invests the country's oil and gas revenues, to snap up stocks at the start of this year's global rally. Result: the fund now ranks as Europe's largest equity investor, owning 1 percent of all the world's shares. The second quarter of this year saw a 12.7 percent return on its investments, the biggest in the fund's 10-year history.
And the fund won't hesitate to use its soft power. Unlike other SWFs, Norway's has some clear environmental goals. In August it issued a document listing measures on climate change that it expects from businesses in which it holds a stake, including an obligation to set targets for reducing greenhouse-gas emissions. In the future, it plans to screen 500 leading companies and send each an annual scorecard marking its performance. Anne Kvam, the fund's head of corporate governance, says Norway would use "all available tools" to get companies to comply. In practice, that could mean forcing changes in a company's leadership. A novel solution: using big oil revenues to control Big Oil.
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