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9 February 2015

Norway’s pension fund to divest from unsustainable assets

Norway’s Government Pension Fund Global, the world’s wealthiest sovereign wealth fund, will divest from a range of sectors including coal mining companies according to an announcement.

The pension fund is worth US$850 billion (£554bn) and has come under growing pressure to use its influence to promote more sustainable and responsible investments.

Environmental groups and some Norwegian politicians have called for the fund to move away from fossil fuels and in 2014 the fund removed 40 companies working in the coal-mining sector from its portfolio.

The fund noted that companies with a high level of greenhouse gas (GHG) emissions could be exposed to risk from regulatory changes with the move towards binding global climate targets leading to falling demand and increased risk to investment.

The fund divested from a total of 49 companies in 2014 based on environmental, social and governance (ESG) factors.

Yngve Slyngstad, CEO of Norges Bank Investment Management, said: “We have gradually increased the scope of risk-based divestments, both geographically and thematically. In total, we have divested from 114 companies in the past three years.”

The fund published its first report looking at its work on responsible investment last week and covers standard setting, active ownership and risk management.

Last year the fund held 2,641 meetings with companies to increase knowledge and understanding of their business and to present expectations and views on ownership

Slyngstad added: “Our aim with this report is to provide a full overview of the many different areas we are working on and so increase transparency on the management of the fund. We recognise that there is still much to be done, and that we will encounter a number of challenges in the years ahead. Our role is to think long-term and protect value for future generations.”

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