Norway Announces Major Divestments From Coal and Oil

Norway has announced plans to sell nearly $900 billion in capital from its sovereign wealth fund in order to reduce national coal investments, while the country is also considering divestment from oil and gas.

On May 27, Norway’s parliament greeted this decision when a cross-party agreement was secured. And they officially backed the move on Friday, November 17 in a majority vote.

The Guardian reports on the implications of this ruling:

It is the largest fossil fuel divestment yet, affecting 122 companies across the world, and marking a new success for the fast-growing and UN-backed climate change campaign.

A new analysis said the fund would sell off over $8bn (£5bn) of coal-related investments as a result.

Essentially, this decision means that Norway’s biggest wealth fund, which ensures the country’s prosperity through global investments, aims to eliminate coal from its investment portfolio — both directly and indirectly.

Norway’s presiding Conservative Party has said that coal poses both a massive global warming risk and a financially troubling future. That’s because UN agreements could eventually render certain coal and fossil fuel investments unusable. Divestment, the party argues, is the only way to ensure both financial and environmental security.

And this isn’t the first time Norway has acted on the issue. In 2016, the sovereign wealth fund excluded 52 coal companies from its investment portfolio, claiming that they didn’t meet the country’s new ethical guidelines. That decision followed an earlier announcement that Norway would stop supporting mining or energy groups which have over 30 percent of their sales or activities tied to coal.

It’s estimated that the largest sell-off from Norway’s latest divestment plans will be the UK group SSE. It will also impact Drax, the UK’s largest coal-fired power plant.

As part of its wider divestment initiative, Norway has proposed dropping oil and gas companies from its own benchmark economic index. In essence, this would cut oil and gas revenues, meaning that the country would gradually pull billions from fossil fuel stocks.

Stephanie Pfeifer, head of the Institutional Investors Group of Climate Change, tells Reuters that this move will be analyzed closely by other funds as they devise their own low-carbon transition portfolios.

“Investors will look even more carefully at which companies are aligning their business strategies to the transition to a low-carbon energy system and which ones are not,” Pfeifer stated. “Investors then have a range of options for managing the risks they perceive.”

Ans as the world’s largest fund, Norway’s sovereign fund may set a precedent in investments. If the country considers oil, gas and coal to no longer be safe commodities for trade, that decision could send ripples throughout the markets at a time when confidence in oil is already low.

Most countries are currently grappling with how to reduce fossil fuel use while increasing renewable investments. However, some environmental advocates have expressed concern that this cautious approach is only perpetuating the fossil fuel industry. Indeed, certain governments have virtually propped up the fossil fuel sector while refusing to grant the same incentive schemes to renewable energy.

Many have been quick to point out that Norway must also cease its oil exploration and extraction – activities that are both unsustainable and economically unsound. Greenpeace is suing to try to prevent oil exploration in the Arctic Ocean, claiming that Norway’s own constitution guarantees each citizen an environment that is “healthy” – a right that appears incompatible with continued fossil fuel extraction.

Photo credit: Thinkstock.

57 comments

Mark Donner
Mark D5 months ago

On a per-capita basis, Norway is the world's largest producer of oil and natural gas outside the Middle East. Trump must be having epileptic fits over this since there's no way he can mess with other countries' independence.

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Elaine W
Elaine W5 months ago

t-rump should pay attention to what great and smart countries like Norway are doing.

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Peggy B
Peggy B5 months ago

Henry m... China is working on cutting theirs more than US.

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Brandy S
Brandy S5 months ago

Thank you for the post.

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Laura R
Laura R5 months ago

Great job, Norway!!!

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Andrea B
Andrea B5 months ago

Noted

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Henry M
Henry M5 months ago

If only countries like the US and China, (but mostly the US) would do the same.

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Winn A
Winn Adams5 months ago

THANKS

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Veronica D
Veronica Danie5 months ago

Thank you so very much

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Veronica D
Veronica Danie5 months ago

Thank you so very much

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