from the ministry of finance. the capital is invested with the objective of achieving the highest possible return within the limits of acceptable risk. the gpfg ’ s mandate requires responsible investment activities to be integrated into investment management. the aim of being a responsible investor is in part to support the long - term financial performance of the gpfg's investments. in addition, we seek to mitigate the financial risks associated with environment - related and social conditions in investee companies. chart : invested in more than 9 000 companies in 73 countries seventy percent of the gpfg is invested in equities. with ownership shares in more than 9 000 companies in 73 countries, we take part in global growth and value creation. many of the companies in the gpfg ’ s portfolio could be impacted by physical climate change and the consequences of regulatory and technological countermeasures. climate change could thus influence the gpfg's long - term return. against this background, norges bank defined company behaviour towards the authorities regarding environmental and climate issues as a focus area for active ownership as early as in 2006. in recent years, interest in responsible investment, and not least climate risk management, has increased among investors. investor activity can be divided into two main categories : working with the companies in the investment portfolio or changing the composition of the portfolio. the gpfg does both. we draw up expectations for portfolio companies, engage them in dialogue and exercise our voting rights. the composition of our investment portfolio also differs somewhat from the broad market index. the bank ’ s responsible investment work is concentrated on three pillars. the first pillar, which we like to refer to as " setting standards ", consists of our support for 5 / 7 bis central bankers'speeches common international standards and the published expectations drawn up for all the companies in the portfolio. the bank ’ s expectations with regard to companies'climate change - related work were first published in 2009. if we and other investors are to understand our own exposure to climate risk, we will need adequate company reporting. to quote bank of england governor mark carney : " in order to watch we must be able to see ". 4 to ensure consistency across markets, disclosures should comply with a common international standard. this would also contribute to raising the bar for all companies. i have already mentioned the tcfd recommendations. the gpfg supports this work. the second pillar of the gpfg ’ s responsible investment management is exercising ownership. we exercise

' speeches fund with an investment portfolio diversified across equities, bonds and real estate around the world. the overall risk, including climate risk, has been reduced. the norwegian economy is also exposed to abrupt changes in operating parameters for oil and gas production through spillovers from offshore activities to the wider economy. we have long known that norway ’ s offshore petroleum activities would be gradually reduced. if global climate policy proves to be stricter than currently expected, the decline in offshore activity may occur sooner and more rapidly than previously assumed. this will have consequences for norway ’ s industry structure. even though it is likely that the biggest changes in oil - related industries lie some years ahead, climate risk may also have an effect on the oil sector in the short term. there are perhaps signs of this effect in recent years ’ oil stock prices. chart : valuation of oil stocks the price - to - book ( p / b ) ratio is lower for international oil companies than the average p / b ratio in the stock market, and this gap has widened in recent years. there may be several reasons for this, but we know that investors ’ climate risk awareness has increased in the same period. measures to influence industry structure are not within norges bank ’ s remit. however, if the decline in the oil - related sector were to occur abruptly, the spillovers to the wider economy could be considerable. monetary policy is adjusted to changes in output, employment and inflation and can therefore support overall activity and employment in a period of restructuring. the responsibility for the restructuring itself lies elsewhere, not least with the business sector. the norwegian banking sector and climate risks norges bank promotes stability in the norwegian financial system. we have recently published our annual financial stability report. the report includes an analysis of adaptation to climate risk in the financial system. economic losses resulting from changes in the regulation of greenhouse gas emissions, new climate - friendly technology or new consumption patterns must primarily be borne by the individual firm and its owners. in the event of very substantial losses, the firm's lenders will also be affected. in norway, these lenders are largely banks. climate risks, and transition risk in particular, may thus be a source of credit risk for banks. norwegian banks'exposures reflect the norwegian economy and industry structure. i have already touched upon the substantial importance of the oil and gas industry to norway ’ s economy. lending to this industry is a possible source of transition risk for banks. chart : oil - related exposures