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ESG

Group appointed to study whether Norway sovereign wealth fund should divest energy

A Norwegian national flag flies from a vessel near the Scarabeo 8 deepwater oil drilling rig in Olensvag, Norway.

The Norwegian Ministry of Finance has appointed an expert group to review whether the world's largest sovereign wealth fund, the Government Pension Fund Global, Oslo, should invest in energy stocks.

The Ministry of Finance announced the move on its website Tuesday.

The appointment of the group follows advice by Norges Bank, which manages the assets of the 8.2 trillion Norwegian kroner ($1.06 trillion) fund, published in November. The advice was to remove the oil and gas sector from its equity benchmark index, leading to a potentially 300 billion kroner divestment.

Index provider FTSE Russell said the advice by Norges Bank relates not only to oil and gas and oil service companies, but also to renewable energy, according to the announcement. The encompassing group of companies will be named the energy sector effective Jan. 1, 2019. The ministry is also looking for comments on the advice in a public consultation, with submissions due by May 11, and is requesting additional information from Norges Bank on some aspects of the advice.

"The government seeks a broad basis for its decision," said Siv Jensen, minister of finance, in the announcement. "The issue must be thoroughly examined, as is the case for all important matters in the management of the GPFG."

The expert group has been tasked with considering whether the fund should be allowed to invest in stocks in the energy sector. The group will be chaired by Oystein Thogersen, professor and rector at NHH Norwegian School of Economics. A document outlining its responsibilities said the expert group's assessments will include what is an appropriate wealth perspective for assessing investments in energy stocks; the relationship between the value of energy stocks and the prices of oil and gas; and the effect of a reduced exposure.

The group will present its report Aug. 24, and the Norwegian government aims to make a decision in the fall. The Norwegian Parliament will be informed about the ongoing work in the report on GPFG in the spring.