Norwegian state fund pulls out of coal investments

On Friday (June 5th) the Parliament of Norway agreed to pull its national pension fund out of coal. The Norwegian fund is the largest state-owned investment fund in the world, with an asset of roughly $900 billion owning around 1.3 percent of all listed companies worldwide.

Under this agreement, the fund will shift the holdings of its coal-related investments whose business rely by more than 30 percent on coal, the New York Times reports. According to the Guardian, the provision, coming into effect on 1 January 2016, will result in a $8 billion investment shift affecting 122 companies throughout the world.

The decision was taken unanimously by the Norwegian Parliament after the green light given by the finance committee on May 27th. On that occasion, the parties reportedly said in a joint statement that “investing in coal companies poses both a climate risk and a future economic risk”. Besides the environmental damages of coal use, a growing number of stakeholders point out that consistently with global environmental targets the vast majority of existing fossil fuel reserves are unburnable and therefore there is a carbon bubble caused by their largely overrated value. This stance seems to find confirmation from the fact the coal companies stock prices have plummeted during the last five years.

The Norwegian decision over its sovereign wealth fund acquires great importance being the biggest institution adhering to the divestment campaign. Supporters of the divestment movement throughout the world hope that the decision will lead to an “avalanche effect” that will pave the way for future divestment from coal holdings.

 

Despite the generally welcoming approach, the provision was not exempt of criticism. As reported by the Guardian, prominent divestment campaigners accused the fund of merely reshuffling investments among coal companies, whereas the money invested in coal holdings actually increased.

The divestment movement gained momentum thanks to the recent involvement of prominent stakeholders. Among these, French insurance group AXA pledged to sell its €500 million coal holdings due to climate change concerns, while Shell’s former chairman argued for the rationality of the divestment campaign.

(Image: Norwegian Parliament, Oslo, 2008. Photo credit: Michael Spiller/Flickr)