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INVESTING/PORTFOLIO STRATEGIES

Coal divestment on tap at Norway’s Government Pension Fund Global

The Government Pension Fund Global, Oslo, could be forced to divest its allocations to certain coal companies, following a unanimous decision by the finance committee of the Storting, the Norwegian parliament.

The divestment would apply to companies that derive 30% or more of their business from coal. The finance committee's proposition will be voted on in parliament June 5, said a spokeswoman for Norges Bank Investment Management, the investment manager of the 7 trillion Norwegian kroner ($957 billion) sovereign wealth fund.

A statement on the Storting website ThursdayMay 28, said all political parties in the parliament agreed the sovereign wealth fund should no longer invest in certain coal companies.

The government will invite NBIM and its council on ethics “for guidance in preparing the criteria for the withdrawal,” said the statement.

The spokeswoman said NBIM does not know the value of companies that would be affected by any ruling. However, Minister of Finance Siv Jensen estimated in a May 20 notice on the government's website that, should an agreement be reached on the 30% threshold, between 50 and 75 companies in the fund's benchmark index would be affected, with a market value around 35 billion kroner to 40 billion kroner.

The finance committee's proposition formed part of its response to a report that was submitted to parliament April 10, regarding the management of the Government Pension Fund Global. The government presented plans for a new climate criterion for the exclusion of companies from the sovereign wealth fund’s portfolio, as well as a strengthening of active ownership.

“We are happy that ... a broad political consensus (has been reached) related to the management of the fund — on this issue (of coal company ownership) as well,” said the spokeswoman in an e-mail. “A broad political consensus among the owners of the fund is a strength in managing wealth for future generations.”