or unacceptable greenhouse gas emissions. it is the independent council on ethics that issues recommendations on observation and exclusion under this criterion. based on these recommendations, the executive board of norges bank takes the final decision. a decision on exclusion means that the company is removed from both the portfolio and the benchmark index. it does not therefore draw on the limit for how much we deviate from the benchmark index. our experience is that the application of this criterion is complex and requires deep insight and detailed information on a company ’ s operations and plans. as a result of the work i have been talking about today, norges bank expects to build up further detailed information on companies ’ climate risk and climate plans. we will share this information with the council on ethics. divestment and exclusion are the final link in our chain of tools, but far from the most important. we plan to be a driver for change, pushing companies to make the transition to net zero emissions. active ownership is our most important tool. conclusion before i finish, i should also mention that we invest in companies that can contribute to climate solutions, both through the environment - related mandates and in the rest of our equity management. we are also now building up a portfolio of high - quality wind and solar power assets. the environment - related mandates were originally introduced in december 2009 and have brought positive learning effects in several parts of our organisation. as we wrote in our letter to the ministry of finance, we intend to draw more on the expertise of the managers of the environment - related mandates in other areas of our management. to sum up : our ambition is to be a leader in responsible investment. together with other large investors, we will contribute to the development of standards and methods for reporting. we will increase both the breadth and the depth of our dialogue with companies on climate issues, and we will use the full toolbox we have as an investor. we will urge companies to take the lowcarbon transition seriously – we are looking for concrete plans, not empty words or greenwashing! and not least, we will have a clear voice in our ownership work. 1 calculations based on analysis firm msci ’ s classification of companies ’ transition risk. 80 percent of the market 5 / 6 bis central bankers'speeches value of the fund ’ s equity portfolio is in the group of companies that msci classifies as having neutral exposure to transition risk. 6 / 6 bis central bankers'speeches

- border expansion. in principle, any european bank can easily set up or acquire a subsidiary in another member state. more importantly, a bank only needs one single banking licence in one member state to be able to offer banking services in all eu member states. so why are we not seeing serious integration of european banking? a number of possible reasons have been cited. these could roughly be divided into three kinds : economic, regulatory, and political. starting with the economic reasons, academics have been arguing that scale and scope economies are limited in banking and perhaps even negative once a certain size has been reached. the standard argument goes like this : banking is a “ relationship business ”, where a large part of a bank ’ s value lies in its customer - relationships. it is from these relationships the bank ’ s value - added comes in the form of its expert knowledge about the financial needs and risks of its customers and its understanding of the local economy. so a bigger bank cannot create more value, because it ’ s all about being close to and knowing your customer. size just increases bureaucracy. and, if the bank would expand abroad, the sources of value are less obvious, since it would lose its natural expert knowledge, and be disadvantaged compared with the incumbents. hence, the economic case for integration would not be as strong in banking as in other sectors. i question this view. on the academic side, more recent banking research actually finds evidence of scale economies. after all, to a large extent, modern banking is about efficiency in running huge operations consisting of vast branch networks, it - systems and thousands of employees. that scale economies exist is also supported by the domestic consolidation taking place in the us as well as in individual eu countries. the banks that are best at running their operations should have plenty of good reasons for expansion. why would the most efficient retail bankers not be able to export their concept, just as ikea, mcdonald ’ s, or american express, to name a few other retail service companies, have done in their industries? however, there are economic obstacles related to the cost of entry into new markets. major cross - border expansion must, with few exceptions, be made through mergers or acquisitions. the success of a cross - border deal depends on the ability to realise synergies. this takes a number of tough decisions regarding reductions in staff numbers and overlapping or inefficient systems and operations. if then to this entry cost are added extra hurdles in the form of regulations and politics