The Norwegian Parliament today has voted and ratified (all proposals passed unanimously) to instruct the world’s largest Sovereign Wealth Fund (Norway’s trillion-dollar government pension fund – aka the Oil Fund) for:
- The Fund to be mandated by Parliament to divest billions of dollars from around 150 upstream oil & gas companies (not the Oil Majors and this list is not final) based on this rationale of a permanent oil price decline. (This was estimated initially by the Finance Ministry at 66bn NOK – which is US$7.5bn)
- The Fund to be mandated to divest billions more in coal companies including RWE and Glencore (who are not named but will be screened out based on the new ethical exclusion criteria which is 20 millions tons or more of coal mined annually or 10GW of operating coal. Bloomberg reports that this coal exclusion may be US$5.8bn based on NGO estimates (bringing the estimated total coal, oil, gas exclusions to over US$13 billion).
- The Fund for the first time to be allowed to invest up to US$20 billion in renewables (2% of the Fund), starting mainly with wind and solar projects in developed markets. The initial renewables investment is recommended at up to US$14 billion but the initial actual upper cap is higher at 2% which is over US$20 billion. According to the Finance Ministry’s own commissioned analysis the value of the global renewable energy infrastructure market is estimated to grow by almost 50%, from US$2.9 trillion in 2017 to US$4.2 trillion in 2030, driven mainly by new solar and wind power capacity additions.
As a giant global fund, owning an average of 1.3 per cent of every listed company in the world, this decision will reverberate across international markets.
According to New Scientist, Bill McKibben, and the Director of Divest Invest (quotes below) this is the largest (publicly disclosed) oil & gas divestment to date.
About the Fund
The Government Pension Fund Global (also known as the Oil Fund and the world’s largest Sovereign Wealth Fund) was set up in 1990 to underpin long-term considerations when phasing petroleum revenues into the Norwegian economy. Norges Bank Investment Management manages the fund on behalf of the Ministry of Finance, which owns the fund on behalf of the Norwegian people. The ministry determines the fund’s investment strategy, following advice from among others Norges Bank Investment Management and discussions in Parliament.