Responsibility for Emissions the Case of the Swiss National Bank’s Foreign Exchange Reserves and the Norwegian Oil Fund

Should public investors take responsibility for the greenhouse gas emissions of the firms that they invest in? This paper answers this question through a comparative study of two very different investors: the Swiss National Bank (SNB)’s foreign exchange portfolio and the world’s largest sovereign wealth fund, the Norges Bank Investment Management (NBIM), the Norwegian sovereign wealth fund. Although both funds target positive returns, the SNB presents itself as a market neutral investor, whereas the NBIM is one of the world’s leading public ethical investment vehicles. Despite having a carbon footprint 10 times higher than the SNB, the NBIM potentially has a more positive impact to stop climate change. The NBIM uses divestment, shareholder engagement and moral leadership to try to mitigate the impact of its portfolio. The SNB on the other hand has a mainly passive approach, with only some minor exclusions. Comparing the impact of their strategies, the paper provides the first detailed study of the powers available to public investors in pursuing environmental objectives.