These exclusions include companies responsible for large-scale environmental damages, and companies whose business models relies heavily on thermal coal. . Specific central bank challenges in policy portfolio management Aside from the GPFG, Norges Bank, as other central banks, also manages policy portfolios. The Bank’s foreign exchange reserves amounted to USD 64 billion at end-June 2019, divided into a 80% fixed-income portfolio and a 20% equity portfolio. The equity portion is invested in around 1,500 companies worldwide, with a focus on the larger markets and currencies, and managed according to similar principles governing responsible investment in the GPFG. The investment of the major part of the FX reserves is to a high degree determined by our central banking policy objectives. Consequently, we face specific challenges in any extension of responsible investment practices. First, this relates to respecting our legal policy mandate in the investment of our FX portfolio. Second, our investments must take due account of liquidity needs for monetary and financial stability purposes, as well as international financial commitments to the IMF. Third, we need to be vigilant to safeguarding independence and preventing conflicts of interest. And finally, while we are a transparent central bank, we need to strike a considered balance between transparency and remaining needs of confidentiality, to avoid undermining our 2/3  BIS central bankers' speeches  primary policy objective. International cooperation To conclude, like in other policy areas, there is a crucial role to play for international cooperation also in the field of climate risk.

As such, the focus is on material ESG issues that impact the fund’s long-term performance. These issues are captured in three responsible investment pillars. First, establishing principles: A set of international principles and standards from the UN and the OECD provides a framework for the Bank’s work with companies and other stakeholders. Priorities are based on the mandate and are characterised by formulating expectations of companies, guidelines for voting, and positions on governance issues. Documents communicate the Bank’s priorities and ensure predictability. Second, active ownership: Voting at annual general meetings is the most important tool for active ownership. Through its voting, the Bank seeks to strengthen governance, improve financial performance and promote responsible investment practices. The voting guidelines provide a principled basis for voting decisions, but also take account of company-specific factors. In the Bank’s dialogue with the largest companies, governance and sustainability topics relevant to long-term return are raised. This includes risks and opportunities associated with climate change, and the Bank expects companies to integrate material climate risks into their strategies, risk management and reporting. Third, investing sustainably: The Ministry of Finance has given us dedicated environment-related mandates. Going forward, these mandates will include investments in unlisted infrastructure for renewable energy. Next, in certain cases we divest from companies that impose substantial costs on other agents, with the aim of reducing the fund’s exposure to unacceptable risks. Finally, our political authorities provide guidelines that specifies that certain investments should be excluded from the fund due to ethical concerns.