Norway may next year decide that its $800 billion sovereign wealth fund, the world’s biggest, should boycott companies that produce coal, the government’s leading party said.
The opposition Labor Party, Norway’s biggest, last month proposed a ban on investments in stocks and bonds issued by those companies in a bid to promote cleaner energy. That proposal could gather a majority in parliament and be included in the oil fund’s investment strategy, according to Nikolai Astrup, energy and environment spokesman for the Conservative Party, which heads the new government.
“It’s an interesting proposal,” he said in an interview in Oslo today. “Parliament shouldn’t express an opinion on the risk profile of investments in different asset classes. That should be left to the experts. If we decide to exclude coal from the portfolio, it’s because coal -– at least coal without carbon capture and storage -- is incompatible with our global climate goals.”
Norges Bank Investment Management, which manages the fund, held stakes in coal producers including BHP Billiton Ltd. (BHP), Bumi Plc (BUMI), Arch Coal Inc. (ACI) and Peabody Energy Corp. (BTU) as of Dec. 31, according to the latest information available on its website.
As the new government prepares for its first annual review of the fund’s management, usually in April, Norwegian Finance Minister Siv Jensen last month backed down from campaign talk of restructuring the fund to tackle challenges resulting from its size. The fund’s value has quadrupled since 2005.
Oeystein Olsen, governor of Norges Bank which oversees the management of the fund, last month said it would be natural for the fund to enter new asset classes such as infrastructure and private equity.
The fund, which gets its money from oil and gas output and dividends from Statoil ASA (STL), the country’s biggest energy producer, should diversify into clean-energy investments to reduce risk, a former strategy adviser said in a report earlier this year.
Labor has said it will follow up on its proposal to cut coal-related investments when the government’s white paper on the fund is presented next year. The Conservatives have yet to take a position on the proposal, Astrup said, declining to comment further.
“It’s not a simple matter,” he said, referring to Norway’s own production of coal. Store Norske Spitsbergen Kulkompani AS mines the fuel on Norway’s Arctic Svalbard island and is 99.9 percent owned by the state.
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