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December 12, 2014

Norway's Sovereign Wealth Fund Declines to Divest from Fossil Fuels
    by Robert Kropp

Nongovernmental organizations criticize an expert report that recommends active ownership instead of divestment, which was published one week after Norway's largest private pension fund announced a policy of divestment. -- Published in October, the 6th Sustainable and Responsible Investment Study 2014 of Eurosif, the European Sustainable Investment Forum, noted improvements in most of the significant sustainable investment practices on the continent. One nation singled out by the study for its robust practices was Norway, whose largest public pension fund—the Norwegian Government Pension Fund—is a signatory to the United Nations' Principles for Responsible Investment (PRI).

But a report published recently by three European nongovernmental organizations—urgewald, Framtiden i våre hender (Future in our hands), and Greenpeace Norway—takes the world's largest sovereign wealth fund to task for its continuing investments in coal. The Norwegian Government Pension Fund, the report charges, is “the Mr. Hyde to the Dr. Jekyll of Norway’s progressive climate policies.” At the end of 2013, the report found, the Fund's holdings in the coal industry exceeded $11 billion. Over the past two years, in fact, the Fund's coal holdings have actually increased, by well over $1 billion.

The report also pointed out that a six-member Expert Group has been tasked by the Norwegian government with evaluating “whether the exclusion of coal and oil companies is a more effective strategy for addressing climate issues and promoting future change than the exercise of ownership and exertion of influence.” Civil society attendees at a public forum in June pointed that engagement and divestment should not be considered mutually exclusive options; the real question, the report states, “is the Norwegian government serious enough about climate change to put the coal industry on its list of excluded activities?”

The Expert Group delivered its 70-page report to the Norwegian government earlier this month. According to a
press release from urgewald, the report confirms that “the Expert Group, the Norwegian Finance Ministry and Norges Bank all fail to recognize that the Pension Fund's investments are helping to fuel an ongoing boom of the coal industry and to lock-in energy and mining infrastructure that may undermine all chances of maintaining climate stability.”

Noting that KLP, Norway's largest private pension fund, recently announced a policy of divestment from coal-based utilities and coal mining companies, Truls Gulowsen of Greenpeace Norway said, “It is shameful that Norway's largest private pension funds are far more willing to take responsible action on climate change than Norway's sovereign wealth fund.”

“There is no point in setting up an Expert Group if all it does is parrot industry claims about future demand in fossil fuels,” Heffa Schücking of urgewald said. “Instead of exploring different options for divestment from the most carbon-intensive parts of the industry, the Expert Group simply claims it would be too difficult to conceptualize consistent criteria - something we have just done in our own study.”

“The Pension Fund is currently invested in companies responsible for 42% of world coal production,” Arild Hermstad of the Future in our Hands said. “Coal is easily replaceable and it is time to stop pretending that these destructive investments don't contradict Norway's climate obligations or won't affect the future of Norwegian people.”

A final decision on divestment from coal is expected to be made by the Norwegian Parliament in the spring.

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