Norwegian wealth fund plans to divest of oil and gas

Norwegian wealth fund plans to divest of oil and gas

Norwegian wealth fund plans to divest of oil and gas

The fund, which was built on the back of Norway's oil wealth, has approximately £27.73 billion, or 6%, invested in oil and gas companies. The proposal is based on the oil and gas sector as defined by the FTSE reference index.

The fund said it doesn't expect returns or market risk to be affected "appreciably" by its proposal, emphasizing that cutting exposure to the energy industry would allow it to crank up investments in other sectors.

The $1 trillion fund, which manages the assets of the oil-rich nation, signalled its intent to prune its exposure to companies including BP and Royal Dutch Shell in a move aimed at making it less vulnerable to a permanent drop in the price of crude. The advice from the Bank requires a thorough assessment, in line with established practice for key decisions on the management of the Fund. This is the big step for Norway as oil and gas contributes around fifth of its economic output.

The fund'sbiggest oil and gas holding at the end of 2016 was $5.36bn in Anglo Dutch firm Shell, followed by $3.06bn in ExxonMobil, $2.04bn in fellow USA oil firm Chevron, $2.02bn in the UK's BP, and $2.01bn in France's Total.

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Green campaigners welcomed the news. "We have argued this for some time and there is no reason for Parliament not to approve this", Martin Norman, Head of Sustainable Finance Campaign for Greenpeace Nordic, told Reuters.

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Rachel Kennerley of Friends of the Earth said: "Bravo Norway, and let's hope it gets through because the future of fossil fuel investment is looking shaky indeed".

"The straight answer is that all other sectors would be weighted up in proportion". The plan, backed by the central bank, still needs approval by the finance ministry, but it would see the fund gradually divesting itself of oil and gas stocks over time.

The timing of the coming divestments is as yet unclear.

The decision now rests with the Norwegian Ministry of Finance.

McKibben compared the bank's recommendation to "the moment when the Rockefellers divested the world's oldest oil fortune" in 2014, when the heirs to Standard Oil said that if founder John D. Rockefeller were alive in the 21st century, "he would be moving out of fossil fuels and investing in clean, renewable energy".

According to the bank's analysis, GPFG investments and its stake in Statoil result in a total exposure to gas and oil equities twice as large as it would be for a broad global equity index.

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