Norway's oil fund could dump shares in fossil fuels

STAVANGER, Norway – Norway is considering excluding foreign oil and coal companies from its $860 billion sovereign wealth fund, which manages profits from Norway’s own fossil fuel industry.

In a shake-up of the fund that sharpens its environmental focus, Finance Minister Siv Jensen said Friday she had appointed a panel to assess the question on the grounds of possible damage to the climate. It will report back to the government in November.

The move highlights Norway’s ambition to be a climate leader globally, while continuing to hunt for oil and gas in its own waters.

The government said the panel would evaluate whether excluding investments in coal and oil companies “is a more effective strategy for addressing climate issues and promoting future change than the exercise of ownership and exertion of influence.”

In 2013, the fund’s exposure to oil and gas shares amounted to 8.4 per cent of its total value. Almost $5 billion was invested in Royal Dutch Shell alone, according to the fund’s annual report.

As part of the review, the fund is set to nearly double the value of investments in renewable and alternative energy holdings even though existing stocks are underperforming the market badly. They are currently worth 20 billion-30 billion kroner ($3.3 billion-$5 billion).

In the four years to end-2013, the fund’s $5.2 billion of environmentally mandated stocks returned just 12 per cent compared with an overall stock market return of 54 per cent.

Jensen also proposed scrapping an ethics council which decides which companies should be excluded from the oil fund on ethical grounds. She suggested that Norway’s central bank take over that responsibility.

Under the current mandate, fund managers are barred from investing in companies that produce tobacco and weapons or breach human rights.