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INVESTING/PORTFOLIO STRATEGIES

Norway’s Government Pension Fund Global excludes 52 coal companies

Coal

A total of 52 companies have been excluded by the Government Pension Fund Global, Oslo, under the sovereign wealth fund's new guidelines on investing in coal companies.

Norway's central bank, Norges Bank — whose investment management arm manages the assets of the 7.1 trillion Norwegian kroner ($851 billion) fund — said in a statement on its website Thursday that it made the decision to exclude these companies following a first round of analysis and recommendations by Norges Bank Investment Management.

Among the 52 companies are 22 U.S.-based companies. The remaining companies are based in Australia, Canada, Chile, China, Greece, Hong Kong, India, Japan, the Philippines, Poland, South Africa and the U.K. A list of the 52 companies is available on Norges Bank's website.

The Ministry of Finance's new criteria for exclusion has been in place since Feb. 1. A company with thermal coal as a significant part of its business activities may be excluded from the fund. Coal power companies and mining companies that base 30% or more of their activities on thermal coal, and/or derive 30% of revenues from coal, may also be excluded.

When it comes to considering recommendations for exclusion of companies that are in breach of these thresholds, the guidelines state that “emphasis should also be given to the forward looking product/fuel mix transition as well as the degree to which the company utilizes renewable energy in its activities.”

Norges Bank said further exclusions will follow this year. Spokesmen for Norges Bank could not be reached for comment and information on the value of any existing holdings in the excluded companies.

Separately, the 235 billion Danish kroner ($36 billion) PKA, Hellerup, Denmark, said on its website that it had updated its criteria on coal companies to enter into dialogue with those for which 25% to 50% of their business comes from the commodity. It will also exclude companies where oil sands account for more than 50% of their business.

One year ago, PKA blacklisted 31 coal companies and entered into dialogue with 23 companies for which 50% to 90% of business comes from coal.

Under its new criteria, PKA wants companies to show how they can reduce coal consumption. Companies that do not will be excluded.