Norway’s $900bn sovereign fund to cut coal investments

Intro

In a move sending shock waves through international energy markets, Norway is on the cusp of abandoning most of its coal investments, following an unanimous recommendation by a parliamentary committee on Thursday. The bipartisan agreement reached by the Standing Committee on Finance and Economic Affairs calls for the country’s US$900 billion Sovereign Wealth Fund to divest its holdings in companies that generate more than 30 per cent of their output or revenues from coal-related activities from the beginning of next year. The move has been welcomed by campaigners as a sign that the country is “really taking a lead” on climate action. They estimate that the move could see as much as $5.5 billion divested – around half of the fund’s current US $11 billion of coal holdings – including investments in companies such as Germany’s RWE, China’s Shenhua, Duke Energy from the Unites States, Australia’s AGL Energy, and Poland’s PGE. Norwegian MPs say the move represents a “great victory for our climate”, breaks “new ground for institutional investors” and sets a strong precedent for funds around the world to abandon “the world’s poorest performing sector” in the face of mounting climate risk. Norway has been in the spotlight in recent weeks, with environmental campaigners putting the country’s massive fund in their sights. Today’s decision marks one of the biggest wins for the global divestment campaign, which has recently secured commitments from the Church of England, the University of Edinburgh, and many more. With Norway’s fund managers regarded as some of the best globally, this move should also send a chill down the spin of investors in dirty fossil fuels globally. Commentators warn the Norwegian Parliament’s decision, which will be finalised on June 5, will create a domino effect on the rest of the investments sector.

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RT @350 The largest sovereign wealth fund in the world has just agreed to divest. Can you feel the momentum? #DivestNorway

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Key Points

  • As investors abandon coal in droves, the renewable energy boom shows that the transition to clean economic development is in flight. Even with the coal price crashing, renewables are already beating it on price in many markets, and will soon beat it in every place on earth. Moving to clean global economies will not only have huge benefits to health, jobs, and the environment, it will save vast amounts of money as social, environmental and health costs of climate change are avoided.

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Key Quotes

  • “Through this decision, Norway is really taking a lead.” – Heffa Schücking from the German NGO urgewald
  • “It is a happy coincidence that this is World Environment Day. 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 recognised across all party lines.” – Arild Hermstad from the Norwegian NGO ‘The Future in our Hands
  • “If you’d told any of us, three years ago, that the planet’s largest sovereign wealth fund would begin divesting, we would have laughed. The way this idea–that the world has far more fossil fuel than it can burn–has spread is an enormously hopeful sign. There’s much work to be done taking on coal, oil, and gas but the momentum is definitely on our side.” – Bill McKibben, co-founder of 350.org
  • “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.” – Labour MP Torstein Tvedt Solberg
  • “It’s a very good start. We’ve crossed an important line declaring the fund as a climate policy vehicle.” – Green Party MP Rasmus Hansson
  • “This is a financially defensive and prudent course of action to protect the Fund from further losses from its coal-mining and coal-burning power-generation investments. Coal markets globally are in the midst of a wrenching structural decline. No investment fund in the world—be it university, pension or institutional—can make a compelling financial case to hold these equities in their portfolio any longer. The leadership of the coal industry has only itself to blame for failing to engage in a constructive manner with investors, governments and regulators and now must bear the brunt of the largest fund in the world looking elsewhere to meet its financial targets. Norway has led, and I suspect they will not be alone for long.” – IEEFA director of finance, Tom Sanzillo
  • “Coal cooks the climate, divides communities, and destroys the environment. With coal prices at an all time low and renewables increasingly bullish, it’s no surprise that major investors like Norway are getting their money out of this damaging sector. Norway is in good company – joining over 220 institutions, including the Rockefeller Brothers Fund, Stanford University and French Insurance megalith Axa, who’ve committed to divest from fossil fuels in the past 12 months. However, this multi-billion dollar act of divestment will hit the ball right out of the park.” – 350.org Australia campaigns director, Charlie Wood
  • “It’s fantastic to see the world’s largest sovereign wealth fund acknowledge that the world needs to move beyond coal. Norway’s sovereign wealth fund is not only the world’s biggest, but it is also considered one of the smartest. Norway divesting from coal should be a clear warning sign to Australia that we shouldn’t be risking our climate and our economy by further exploiting our coal.” – AYCC National campaigner, Dan Spencer

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  • MT @KoolAidKid “Exit from coal by 1 of the world’s largest investors gives very clear signal on..climate risk,”  http://on.wsj.com/1GEA4R7
  • RT @alisterdoyle: Norway’s $900 bln sovereign fund told to reduce coal assets @StineBuch http://reut.rs/1HNBzxT
  • MT @CAREClimate Finance committee pushes for Norway sovereign fund to divest from coal; parliament votes June 5 http://bit.ly/1J6PPRc