Norges Bank excluded 12 fossil-fuel companies from the world's largest sovereign wealth fund following assessments against its coal and oil criteria.
Five companies have been excluded from the 10.3 trillion Norwegian kroner ($995 billion) Government Pension Fund Global based on coal-related assessments, the central bank said Wednesday. The companies are Sasol Ltd., RWE AG, Glencore PLC, AGL Energy Ltd. and Anglo American PLC. A further four companies — BHP Group Ltd./BHP Group PLC, Vistra Energy Corp., Enel SpA and Uniper SE — have been placed on watch.
The changes were made by the bank's executive board and based on recommendations by Norges Bank Investment Management, which runs the assets of the fund.
"For several of the companies of which exclusion is now being made public, the market situation, including the liquidity of individual shares, has meant that it has taken a long time to sell the shares in a reasonable manner," the announcement said.
The fund's guidelines for excluding or placing a company on watch related to coal include where 30% or more of income is derived from thermal coal, 30% of more of the firm's operations are based on thermal coal or a company produces more than 20 million tons of thermal coal on an annual basis.
The bank also said it had excluded seven energy companies from the fund. Canadian Natural Resources Ltd., Cenovus Energy Inc., Suncor Energy Inc. and Imperial Oil Ltd. were dropped for "unacceptable greenhouse gas emissions," the announcement said.
"The council on ethics recommended to exclude the companies because of carbon emissions from production of oil to oil sands. It is the first time this criterion is being applied," Norges Bank said.
Due to "the risk of contribution to severe environmental damage," ElSewedy Electric Co. was excluded because of its participation in the development of a hydropower project in Tanzania, while Vale SA was excluded "as a result of repeated dam breach," the announcement said.
Further, Centrais Eletricas Brasileiras SA, known as Eletrobras, was excluded "because of unacceptable risk that the company contributes to serious of systematic human rights violations" in relation to the development of a powerplant in Brazil.
Two previous exclusions were also revoked by the executive board, based on recommendations by the fund's council on ethics.
The decision related to AECOM Ltd., which was excluded in 2018 due to the production of nuclear weapons, has been reversed as "these activities have now been discontinued." And Texwinca Holdings Ltd., which was excluded last year "because of systematic breach of workers' rights in factories owned by a subsidiary," had its exclusion revoked because the subsidiary has been liquidated.
"Norges Bank's executive board has not independently assessed all aspects in the recommendations, but finds it adequately substantiated that the criteria for exclusion and observation have been fulfilled under the guidelines," the announcement said.
The value of assets related to the exclusions and watchlist and how the fund assets will be reinvested could not immediately be learned.