Response to the Survey on the proposed Finance Sector Supplement of the Natural Capital Protocol

Norges Bank Investment Management welcomes the opportunity to share our views on the proposed Finance Sector Supplement of the Natural Capital Protocol.

Norges Bank Investment Management is the investment management division of the Norwegian Central Bank and is responsible for investing the Norwegian Government Pension Fund Global. As of 30 September 2016, the fund was invested in USD 892 billion of assets globally.

Norges Bank Investment Management expects companies to identify, address, and disclose material sustainability risks and opportunities they face. Natural capital is a useful concept for our investee companies to frame risks and opportunities related to the environment. A protocol that promotes the integration of this concept in companies’ operations and improves internal decision-making could reduce company risks from environmental degradation, and potentially help companies identify new revenue streams.

One challenge to including natural capital information in our organisation’s processes is arriving at a uniform and robust methodology to account for natural capital that would also allow cross-sector comparability, and ensuring consistent reporting of this data. A Finance Sector Supplement could guide a diverse set of financial sector participants on how the natural capital concept could be relevant to them and make output consistent and comparable between companies who apply the protocol.

We support the creation of separate supplements for the banking, investment, and insurance subsectors, in a manner that recognises the different relationship each has to companies. Furthermore, appropriate actions and, as the case may be, the tracking of results for investors in secondary markets will be different than for real economy agents. Specifically, investors’ priorities will often be based on an information set underpinned by consistent and comparable disclosure by companies. The Finance Sector Supplement should recognise that and

seek to concentrate on the tools through which finance sector participants could include natural capital considerations – for investors, these tools include risk assessment, standard setting, and engagement.

You can find our response to the specific questions set out in the survey in the appendix to this letter. We have also delivered our response electronically.

Yours sincerely,

Petter Johnsen
CIO Equity Strategies

Basak Yeltekin
Senior Analyst Ownership Strategies

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