Norway's $900 billion government pension fund, generally considered to be the largest sovereign wealth fund in the world, is to sell off many of its investments related to coal. It is the biggest institution yet to join a growing international movement to abandon at least some fossil fuel stocks.
The Norwegian parliament voted on 5 June to order the fund to divest its holdings of billions of dollars of stock in companies whose businesses rely at least 30 % on coal. The decision will take effect next year.
The fund joins several prominent institutions that have made similar decisions recently. The Church of England announced last month that it would drop companies involved with coal or oil sands from its $14 billion investment fund, and the French insurer AXA said it would divest $560 million in coal-related investments. The Rockefeller family undertook last year to remove fossil fuel investments, beginning with coal, from their charity the Rockefeller Brothers Fund.
The irony inherent in these decisions, given that the Rockefeller fortune derives from Standard Oil, while Norway is a major producer and exporter of oil and gas, is not lost on commentators from the fossil industries who brand them as 'symbolic' and take comfort from the fact that the direct financial impact of these divestments is negligible.
On the other hand divestment decisions from funds like Norway's are important because they require a moral position that can gain momentum and become widespread.
Bob Massie, a founder of the Investor Network on Climate Risk, an organisation of institutional investors affiliated with the business environmental group Ceres, commented that "It lays the groundwork for the transformation of cultural and political views in a major topic that people would rather avoid," he said. "This requires people to say, 'What are we going to do? What are our choices? What do we believe in?' "
Marthe Skaar, a spokeswoman for Norges Bank Investment Management, which manages the Norwegian fund, said its goal was "safeguarding and building financial wealth for future generations in Norway." Its reasons for divesting include "long-established climate-change risk-management expectations," she said.
The fund's 30 % threshold for divestment applies to whether a company's business is based on coal, as in mining companies, or the percentage of its revenue that comes from coal. The second category would include power companies that burn coal.
Norway's decision highlights a national ambivalence about fossil fuels, in a country that gains over 90% of its electrical energy from hydropower. In the past governments have fallen over the question of a carbon tax, but the power companies still feel able to trade daytime hydropower for night-time fossil-fuelled power bought from Germany at prices advantageous to both.
The pension fund itself is nicknamed the "oil fund" because its wealth comes from the nation's oil and gas revenues. But proponents of the move say that it helps prevent Norway from compounding the environmental damage that its own production causes by investing in environmentally destructive companies.
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