The double materiality of Norway's Sovereign Wealth Fund: An irreconcilable case of aligning the ‘oil fund’ with Net Zero?

The Norwegian political economy usefully illustrates the issues central banks face amid the financial risks of<br/>climate change. As well as the implications for monetary governance, they also oversee the country's Sovereign<br/>Wealth Fund, otherwise referred to as the ‘oil fund’, which places its source of national prosperity in opposition<br/>to climate objectives. Combining the concept of double materiality with original qualitative data, this article<br/>demonstrates that, despite claims of institutional separation, the management of the fund cannot be divorced<br/>from monetary policy. This analysis shows that recent economic crises have revealed Norwegian monetary<br/>stability and the value of the fund to be indexed to the supply of oil, exposing the Norges Bank to twice the<br/>climate risk of other central banks. Because of this ‘uncomfortable knowledge’, the Norges Bank assumes a<br/>carbon-biased or idiosyncratic view of double materiality that potentially increases the prospect of systemic risk