Norwegian pension fund divests from ‘financially worthless’ fossil fuel firms

Storebrand, a major Norwegian pension fund and life insurance firm, has divested from 19 fossil fuel companies to ensure “long-term stable returns” – as these stocks, it says, will be “worthless financially” in the future.

In total, it has pulled out of 13 coal extractors and six firms that are heavily exposed to oil sands – arguably the most energy intensive form of fossil fuel.

Its decision to divest comes after the publication of UK-based thinktank Carbon Tracker’s latest Unburnable Carbon report, which said some 60-80% of fossil fuel reserves need to be left in the ground if the worst effects of climate change are to be avoided.

Click here to read The Guide to Climate Change 2013

The study, which Carbon Tracker produced alongside the London School of Economics’ Grantham Research Institute, therefore calls the bulk of reserves “unburnable”. It says investors that currently have high exposure to high-carbon assets are at risk of possessing “stranded assets” – a term used to describe financially worthless investment stocks.

Quoted in a press release, Storebrand head of sustainable investment Christine Tørklep Meisingset said the firm had gone down the divestment route “to reduce fossil fuel and CO2 exposure and ensure long-term stable returns.”

She added, “[As] the stated climate goals become reality, these resources are worthless financially, but it is also true that they do not contribute to sustainable development in the extent and the pace we want.

“Exposure to fossil fuels is one of the industry’s main challenges, and for us it is essential to work purposefully to take our share of responsibility.”

Meisingset went on to say that Storebrand has no dedicated ethical funds, but instead, applies the same “high standards” across all of its products. Its decision to divest was done on purely financial grounds.

Dutch bank Rabobank recently took the extraordinary step of enforcing a blanket ban on loans to firms involved with oil sands and fracking for shale gas. In both cases, it claimed the financial and environmental risks were too great for it to lend money.

Further reading:

Report says investing in fossil fuels is a ‘very risky decision’

What fossil fuel divestment can learn from apartheid

The UK canary in the carbon mine

Fossil fuel firms are failing to address the low-carbon imperative

The Guide to Climate Change 2013