$800bn Norwegian oil fund under pressure to divest from coal

The world’s largest sovereign wealth fund, the Government Pension Fund of Norway (GPF), has come under additional pressure to drop its investments in the coal industry.

The opposition Labour party has urged the coalition government to force the fund to divest from coal companies, building on its existing commitments to avoid investment in unethical companies such as weapons manufacturers and tobacco or palm oil firms. 

Former foreign minister Jonas Gahr Støre argued that those “who believe that humans are responsible for climate change” must look at how people can take responsibility for reducing carbon emissions.

The Labour party has asked the new government to address their proposal in a white paper next year.

The fund, also known as the ‘oil fund’, is managed by Norges Bank Investment Management (NBIM) but is owned by the Norwegian state. It is funded primarily by surplus wealth from the country’s petroleum industry and owns around 1.25% of the world’s stocks. Its value is thought to be close to $800 billion (£496 billion).

Around 10-15% of the fund’s overall portfolio is currently invested in the oil and gas sector – amounting to as much as $114 billion. The WWF reported in June that GPF invested in 147 of the 200 companies in the world that hold the largest reserves in fossil fuels.

GPF has come under heavy criticism for this policy. A report published earlier this year by the thinktank Re-Define found the GPF had “serious deficiencies” in its investment strategy. Researchers said it was lagging behind many peers, as a result of its approach to ethical investment and sustainability.

Despite the report labelling the funds approach to climate change as “schizophrenic”, Norwegian finance secretary Hilde Singsaas responded in August that divestment from fossil fuels was not the answer.

Nina Jensen, chief executive of WWF Norway, said that NBIM’s investment strategy “has huge global implications”.

“By redirecting funds from fossils, like coal, to renewables Norway can make a positive impact on the world like no-one else”, she added.

In October, the Norwegian government announced that the GPF will invest in sustainable companies and projects in developing countries and emerging markets.

Further reading:

$760bn Norwegian oil fund considering boosting sustainable investments

We will not ditch oil and gas, says Norway finance ministry after criticism of $750bn fund

Major flaws in $760bn oil fund’s approach to climate change and sustainable investment

Fossil fuel divestment campaigns can help ‘stigmatise’ industry 

Swedish pension funds divest from firms over ethical concerns