Norway's sovereign wealth fund told to reduce coal assets

Published by MAC on 2015-05-28
Source: Statement, PlanetArk

Norwegian Parliament Set to Ban Coal Investments

Press Release

28 May 2015

On May 27th, the Finance Committee of the Norwegian Parliament issued a unanimous recommendation to divest the country’s sovereign wealth fund from the coal industry.

The Norwegian Government Pension Fund Global is not only the world’s largest sovereign wealth fund; it is also one of the top ten investors in the global coal industry.

The recommendation asks the government to exclude companies deriving more than 30% of their revenues or their power production from coal. It will be formally adopted by the Parliament on June 5th. “It is a happy coincidence that this is World Environment Day,” says Arild Hermstad from the Norwegian NGO ‘The Future in our Hands’. “Coal is bad for all aspects of our environment: it destroys landscapes, contaminates water resources, pollutes the air and is the number one threat for our climate. Such investments are not in line with the values of Norwegian society, and the unanimous vote of the Finance Committee means that this is now recognized across all party lines.”

MP Torstein Tvedt Solberg from the Labor Party, who helped broker the agreement said: “I am pleased that all parties have agreed to withdraw the Pension Fund from coal. This is a great victory for our climate.”

“Through this decision, Norway is really taking a lead,” says Heffa Schücking from the German NGO urgewald. According to Schücking, the Norwegian exclusion criteria go further than what French Insurer Axa announced last week and set a new standard for investors worldwide.

The Parliament is instructing the Norwegian Government to begin implementing the new criteria from January 2016 onwards. “We expect that billions of euros will be withdrawn from the coal industry, when this happens,” says Truls Gulowsen from Greenpeace. “This is a huge win for the divestment movement and a real sign of hope that investment patterns can be changed, “ he adds.

NGOs expect that the Pension Fund’s investments in companies like Germany’s RWE, China’s Shenhua, Duke Energy from the Unites States, Australia’s AGL Energy, Reliance Power from India, Japan’s Electric Power Development Corporation, Semirara Mining from the Philippines and Poland’s PGE will, for example, all be shed. “Norwegian NGOs will not be alone, when they celebrate,” says Schücking. “There are broad popular resistance movements against the coal industry in all of these countries, and they are going to say: Thank you for divesting, Norway!”

For more information, contact:

Heffa Schuecking: heffa[at]urgewald.org or +49 160 96761436

Truls Gulowsen: tgulowsen[at]greenpeace.org or +47 901 07 904

Arild Hermstad: arild.hermstad[at]framtiden.no or +47 980 36 762

---

Norway's $900 billion sovereign fund told to reduce coal assets

Stine Jacobsen

PlanetArk

28 May 2015

Norway's $900 billion sovereign wealth fund, the world's largest, should cut its exposure to the global coal industry and sell stakes in firms that focus on the sector, a key parliamentary committee said on Wednesday.

The finance committee agreed in a bipartisan motion that the fund, which owns about 1.3 percent of all listed companies globally, should sell stakes in firms that generate more than 30 percent of their output or revenues from coal-related activities.

Already under pressure from Norway's political establishment, the fund has been selling down its coal portfolio and said its holdings were already small.

"Investing in coal companies poses both a climate risk and a future economic risk," the parties said in a joint statement.

"Coal is in a class by itself as the source with the greatest responsibility for greenhouse gas emissions, so this is a great victory in the battle against climate change," opposition Labour MP Torstein Tvedt Solberg added.

The law still needs to be approved by parliament.

The minority right-wing government, which originally proposed softer criteria, also warned that adding too many investment criteria could lower the fund's long-term returns.

"If you start to add non-financial aims or constraints to the management that will affect returns for the fund and that does mean lower welfare and standard living for future generations," Finance Ministry State Secretary Paal Bjoernestad told Reuters.

The new exclusion criteria would be applicable to producers, such as mining firms, and consumers, such as power generators, the committee said.

The fund, managed by the central bank, would make the actual divestment decisions, also taking into account if companies plan to reduce their coal exposure.

Its coal mining assets totalled 493 million crowns ($63.51 million) at the end of the first quarter, down from 805 million three months earlier while its general mining assets were worth 31 billion crowns and power production 109 billion.

Environmental groups dispute the coal exposure calculation, however, and say the actual figure is much larger because it does not include such companies as BHP Billiton Ltd , one of the world's biggest coal firms, because coal is a relatively small part of its business.

The value of the shares that will be divested could be as much as $5.5 billion, including stakes in big European and U.S. power companies including Duke Energy Corp, RWE AG , American Electric Power Co Inc and Dominion Resources Inc, head of Greenpeace in Norway, Truls Gulowsen, said.

($1 = 7.7631 Norwegian crowns) (Editing by David Evans and Lisa Shumaker)