THE MANAGEMENT OF THE GOVERNMENT PENSION FUND GLOBAL 2014

Transcription

1 THE MANAGEMENT OF THE GOVERNMENT PENSION FUND GLOBAL 214 HEARING BEFORE THE STANDING COMMITTEE ON FINANCE AND ECONOMIC AFFAIRS OF THE STORTING, 4 MAY 215. YNGVE SLYNGSTAD, CHIEF EXECUTIVE OFFICER

2 Annual return Percent 3 Return 214 7,6 % Last ten years 6,2 % 3 Annual return 2 Annually since ,8 % 2 Accumulated annualised return Source: Norges Bank Investment Management

3 Accumulated change in market value As at Billions of kroner Return Krone rate Inflow (after management costs) Kilde: Norges Bank Investment Management

4 Management objectives OBJECTIVE HIGH LONG- TERM RETURN SUBJECT TO Acceptable risk Responsible investment Efficient organisation Transparent 4

5 Three pillars of responsible investment STANDARD SETTING International standards Our expectations and principles Research into responsible investment COMPANY DIALOUGE Voting Interaction with companies Engaging with boards RISK MONITORING Monitoring risk Industry initiatives Focus areas Environmentrelated mandates Risk-based divestments 5

6 Environment-related mandates Investments in environment-related mandates Grouped by sector based on FTSE environmental classification. Billion NOK

7 Divestments and company exclusions As at Weapon-types Tobacco 21 Other Environment Business model Product based exclusions Conduct based exclusions Risk based divestments 7 Source: Norges Bank Investment Management

8 Risk based divestments 26 Other Deforestation 39 Other Water Deforestation 49 Water Greenhouse gas emissions Water Deforestation 12 GHG emissions Water Deforestation Q Source: Norges Bank Investment Management

9 Fund holdings in coal mining Divestment from coal mining companies focused on energy coal Divestment may for some companies take time to implement Still exposed to companies focused on metallurgical coal for steel production ,3%,2%,1% Q ,26%,15% ,8% Value (NOK millions) Number of companies Share of equity portfolio 9,%,2%,1% Source: NBIM, FTSE/ICB sektor classification

10 Fund holdings in selected sectors NOK billions. Equity portfolio as at Coal mining General mining Power production Oil and gas production 1 Source: Norges Bank Investment Management, FTSE/ICB sector classification. Power production includes conventional electricity and multiutilities. Oil and gas production includes Exploration and production and Integrated

11 Electricity generation Fuel mix. Top ten electricity generation companies in the equity portfolio % 25 % 5 % 75 % 1 % Iberdrola SA GDF Suez SSE PLC E.ON SE Enel SpA NextEra Energy, inc Duke Energy Corp Dominion Resources Inc RWE AG Coal Other Renewables 11 Source: Company reports for reporting year 213. «Renewables» includes among other wind, solar, geothermal and wind power. «Other» includes among other nuclear and oil and gas based power generation

12 Letter to general mining companies Approach to managing the business towards a less emission-intensive energy system Identify costs of separating the mining of coal from other mining operations Timeline for any such separation Research and development in lowemission technologies or processes 12

13 Additional real estate investments in 214 Examples Bank of America Merrill Lynch Financial Centre, London. Foto: GIC Lenbach Gärten, München. Foto: AM Alpha GmbH 4 1 Federal Street. Foto: Boston Properties Foundry Square II, San Francisco. Foto: Eastdil Secured Real estate investments net asset value per year end NOK billions and percent of fund Projection for 215 and % 13 Atlantic Wharf, Boston. Foto: Anton Grassl/Esto 61 Lexington Avenue, NY. Foto: Boston Properties 1 1. %.3 %.7 % Source: Norges Bank Investment Management

14 THE MANAGEMENT OF THE GOVERNMENT PENSION FUND GLOBAL 214 HEARING BEFORE THE STANDING COMMITTEE ON FINANCE AND ECONOMIC AFFAIRS OF THE STORTING, 4 MAY 215. YNGVE SLYNGSTAD, CHIEF EXECUTIVE OFFICER