Norway’s $1tn sovereign wealth fund is about to sell a large number of its oil and gas holdings. Tweet This! Norway is western Europe’s biggest oil and gas producer and its sovereign wealth fund, used to invest the proceeds of the country’s oil industry, is preparing for one of the largest divestments of fossil fuel assets. This move follows a decision by the Norwegian parliament that bans the fund from investing in firms that get more than 30% of their business from coal.
The Norwegian oil fund is the world’s largest sovereign investor, owning $37bn of shares in oil companies such as BP, Shell and France’s Total, and is expected to dispose of approximately $7.5bn of oil and gas companies focused only on exploration and production. The fund has also reduced the proportion of its $1 trillion fortune invested in the highest greenhouse gas emitting companies.
Environmental campaigners welcomed this move by the world’s biggest state-owned investment fund, hoping it signals the beginning of a trend for investors shifting their money away from activities blamed for climate change. It certainly increases the pressure on large energy companies to do more to embrace and adapt to the energy transition towards less polluting fuels.
The Institutional Investors Group on Climate Change (IIGCC), representing investors with over 21 trillion euros ($26 trillion) in assets under management, welcomed the move. “The fund … reducing its stake in major emitters is a strong signal that investors are increasingly focused on aligning their portfolios with the rapidly progressing energy transition,” said Stephanie Pfeifer, IIGCC chief executive.
The divestment also aims to reduce Norway’s dependence on an industry facing questions regarding its long-term future. Global climate goals are accelerating efforts to reduce dependence on fossil fuels, and this decision will send shockwaves through an industry trying hard to improve its green credentials, under increasing pressure from investors. Large oil and gas companies expected by Norway to invest in renewable energy in the future, were spared.
“This partial divestment from oil and gas is welcome, but not enough to mitigate Norway’s exposure to both global oil and gas prices and the wider financial ramifications of climate change. However, it does send a clear signal that companies betting on the expansion of their oil and gas businesses present an unacceptable risk, not only to the climate but also to investors,” said Charlie Kronick, oil campaigner at Greenpeace UK.
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