Norway's Biggest Wealth Fund Divests out of Coal

Norwegian sovereign wealth fund, the Government Pension Fund Global, says it divested out of from 73 companies in 2015 for social and environmental reasons, including coal-producing or coal-using energy companies.

In its annual report, the fund said it had reviewed a number of its investments in light of social and environmental concerns, particularly climate change aims and greenhouse gas emissions. As a result, it sold stakes in 16 electricity producers that use coal in their fuel mix.

"Electricity production from coal is an area that may face particularly high risk in connection with regulatory changes in selected markets," the report said. "A number of countries and regions have introduced targets to reduce greenhouse gas emissions from the power sector. When considering companies for divestment we focused on those with a relevant business mix allocated to electricity production and where coal represented a relevant percentage of the fuel-mix. As a result of our assessment of this sector, we divested from 16 companies in 2015."

The report did not name the 16 companies affected by the divestment. 

Mining companies that produce coal for electricity production were also affected. According to the report, the fund withdrew from a total of 11 mining companies for that reason. This follows the fund's withdrawal from 14 such companies in 2014 for the same reason. 

In a statement about the release of the annual report, CEO of Norges Bank Investment Management Yngve Slyngstad said the fund was concerned with the risk environmental and social factors could have on profitability in the future. 

"We aim to quantify the risk in our investments, he said. "We expect companies to report on how their operations impact their surroundings and on factors that could affect their profitability in the long term."

Previously called the Petroleum Fund, the Government Pension Fund Global is financed by oil and gas revenues. Despite its name, the fund has no pension liabilities. It is managed by Norges Bank Investment Management on behalf of Norway's finance ministry. 

Other factors the fund looked at in 2015 in relation to divestments were social and governance issues relating to health, safety and the environment, human capital and corruption.

Erica Mills