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Sovereign Wealth Funds

Norway’s wealth fund moves full steam ahead with divesting of energy stocks

An oil drilling platform near Leirvik, Norway

Global Pension Fund Global, Oslo, is set to divest $7.5 billion from investments in oil and gas industries under a proposal Friday from the Norwegian government.

The proposal, set for a parliamentary vote, is aimed at reducing the aggregate oil price risk in the Norwegian economy through a divestment of energy stocks by the 8.93 trillion Norwegian kronor ($1 trillion) sovereign wealth fund.

The government wants to reduce the fund's sensitivity to oil price decline by selling companies that explore and produce oil and gas, rather than selling a broadly diversified energy sector, Norwegian Minister of Finance Siv Jensen said in a news release.

Under the proposal companies classified as exploration and production companies by the fund's index provider, FTSE Russell, will be excluded from the GPFG's benchmark index and investment universe.

Securities of companies will be sold over time, after the Norwegian Parliament has deliberated. An exclusion of energy stocks in the GPFG's portfolio will serve to further reduce the oil price risk, the government said.

"It is anticipated that almost all of the growth in listed renewable energy over the next decade will be driven by companies that do not have renewable energy as their main business," Ms. Jensen said in the release. "The fund should be able to participate in this growth."