A government panel has rejected calls for Norway’s $870 billion (£555bn) wealth fund to divest from polluting fossil fuels, instead advocating an engagement approach.
The Government Pensions Fund of Norway is the world’s largest sovereign wealth fund. The fund owns around 1.25% of the world’s stocks, with 10-15% of its portfolio being invested in oil and gas, earning it the name ‘oil fund’. Of the 200 companies holding the majority of fossil fuel reserves, the oil fund invests in 147.
The fund committed to increasing its green investment in April this year but campaign groups voiced disappointment that it didn’t go further. Pressure for the fund to drop its investments in the coal industry has been growing, with the opposition Labour party urging action last year.
In a report, the panel argues that the fund can have a greater influence and exact change from fossil fuel companies by remaining shareholders. It recommended that the fund take a more active approach and engage with the firms on matters of climate change and assess the risk climate change poses to the fund’s portfolio.
Martin Skancke, who led the panel, commented, “Climate is a serious question, and it deserves more than symbolic acts. It would be a shame if we folded our hands in companies where we have the opportunity to be a demanding owner.”
The decision goes against the current trend of institutions globally announcing their decision to divest. Supporters of the movement argues that by divesting institutions not only help safeguard the environment but also their own financial returns, noting that as more climate policy comes in companies in the industry could face difficulties.
Commenting on the panel’s recommendation, Bill McKibben, co-founder of campaign group 350.org, said, “We’ve watched with interest for the last two years as some of those who said they weren’t ready to divest have instead promised to ‘engage’ with the fossil fuel industry.
“So far that engagement has yielded ringing promises from the biggest oil companies that they will indeed dig up and burn all their reserves and look for more.”
Photo: Bernardo62 via Flickr