“Pretend Divestment” Versus Real Divestment In Norway’s Sovereign Wealth Fund

May 29th, 2015 by Joshua S Hill

Norway’s sovereign wealth fund announced to the world it had divested from 51 coal companies in 2014 earlier this year, signaling one of the biggest divestment announcements of the current global divestment trend. However, a new report has shown that instead of decreasing their holdings in the coal industry, Norway’s Government Pension Fund has increased by over 3 billion kroner, bringing the funds total coal holdings up to 85.8 billion kroner.

Interestingly, within days of the report’s release, Norway’s parliament has since agreed to sell its shares in companies that generate more than 30% of their income or their electricity from coal.

Norway’s Ministry of Finance announced late 2014 that the country’s Government Pension Fund (GPF), the world’s wealthiest sovereign wealth fund, would begin excluding the most harmful climate offending companies from the Fund on a “case-by-case basis.” Two months later, the GPF revealed the 51 companies it had divested from, creating a lot of hype surrounding the country’s apparent commitment to fossil fuel divestment.

The hype was increased when, in March, Norway’s capital city, Oslo, announced that it would become the first capital city in the world to divest from coal investments, a decision worth $7 million.

However, earlier this week a new report entitled Still Dirty, Still Dangerous (PDF), compiled by NGO’s Urgewald, Framtiden i våre hender, and Greenpeace Norway, revealed that not all was as it seemed.

According to the authors of the report, focusing “only on divestment actions” but not on “where funds have been re-invested” creates a false dichotomy, creating the “illusion that the Pension Fund’s coal portfolio has shrunken, while resources have, in fact, only been shifted from one coal company to the next.”

In fact, instead of decreasing their coal investments, not only does the report reveal that the GPF has holdings in coal companies worth 85.8 billion kroner, but those coal companies the GPF has holdings in create 23% of the world’s coal production.

While there might be a decrease from 2013 numbers — when the GPF was invested in companies with 42% of the world’s coal production — clearer reporting is required from institutions and companies to avoid intentional or unintentional deception of the scale of which Norway’s sovereign wealth fund seems to have been caught up in.

Understanding the impact of Norway’s governments decision to divest from coal companies will take some time to fully understand, however Greenpeace figures estimate that the new legislation would see the GPF pull around $5 billion out of the coal sector.

“This is very important and will send a very strong signal to coal burning and mining companies all over the world,” Truls Gulowsen, head of Greenpeace Norway told DW. “The fund is one of the world’s top 10 largest investors in the global coal industry, so this will have a real impact.”









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