Norway’s sovereign wealth fund has taken another step towards divesting from fossil fuels, as the government announced a formal review of whether the fund should halt investment in coal, oil and gas.
Worth $840 billion (£503 billion) the fund is the biggest wealth fund in the world and if successful, the move could be the biggest win to date for the global divestment campaign, which encourages investors to ditch their holdings in dirty energy assets.
The fund is a major shareholder in carbon intensive companies such as BP and Shell and Australian companies BHP Billiton, Woodside Petroleum and Whitehaven Coal.
Around 8.6% of the fund’s equity portfolio is said to be in oil and gas.
The Progress Party – which leads a minority government in Norway – was under pressure from the country’s non-government majority in Parliament to ban the fund from investing in coal.
The new independent panel will assess whether there is an environmental and economic case for divesting from significant fossil fuel assets.
The fund is already banned from investing in tobacco and weapons, and it sold out of 27 mining companies during 2013.
The panel is expected to report back in 2015, after assessing the full range of benefits and risks associated with the fund’s fossil fuel holdings.
The move appears to be designed in part to head off a proposal by the opposition Labour Party for the fund to fasttrack the divestment of “dirty” coal investments – a motion that had won significant support since it was announced late last year.
However, the new review could pave the way for a much wider divestment of the fund’s fossil fuel assets and will be seen as a coup for campaigners who have warned that institutional investors are backing a “carbon bubble” whereby they invest in fossil fuel assets that cannot be exploited if the world is to avoid dangerous levels of climate change.
Any move by the Norwegian wealth fund to offload its fossil fuel assets would send shockwaves around global markets, given that the fund, itself built on the country’s offshore oil and gas revenues, holds an estimated 1.3 per cent of global market capitalisation.
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