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