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Norwegian oil fund cuts 10 more companies over coal activities

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Norges Bank Investment Management (NBIM), the manager of Norway’s giant sovereign wealth fund, has excluded 10 more companies from its portfolio because of their involvement in coal business, and put another two under observation.

The latest exclusions bring the total number of companies outlawed by the NOK7.6trn (€850bn) Government Pension Fund Global (GPFG) because of coal to 69, with a further 13 firms placed under observation.

The move came as a result of the manager’s third round of analysis of businesses that may be affected by its coal criterion, NBIM said. All of the latest companies to be excluded are unlisted subsidiaries that issue bonds.

Green bonds were excepted from the analysis, NBIM said, as well as subsidiaries deemed to have significant renewable energy activity.

The latest companies to be excluded by NBIM are:

  • CEZ (Czech Republic)
  • Eneva (Brazil)
  • Great River Energy (US)
  • Otter Tail Corp (US)
  • HK Electric Investments & HK Electric Investments (Hong Kong)
  • Huadian Energy Co (China)
  • SDIC Power Holdings Co (China)
  • PGE Polska Grupa Energetyczna (Poland)
  • Korea Electric Power Corp (Korea)
  • Malakoff Corp (Malaysia)

The two companies put on observation are both US-based: NorthWestern Corp and Portland General Electric Company.

The SWF said it divested from 23 companies on the basis of ESG assessments in 2016, and that it had sold off a total of 210 companies over the last five years on such grounds.

Separately, NBIM said it questioned firms about environmental, social or governance (ESG) issues in more than 1,500 company meetings last year.

Publishing its 2016 report on responsible investment, NBIM said good corporate governance and sustainable business practices were in the GPFG’s long-term interest. 

In a recent interview with IPE, NBIM’s chief executive Yngve Slyngstad said that in 2017 the investment manager expected to have nearly 4,000 meetings with companies. It held 3,790 meetings with 1,589 companies last year.

“In nearly half of those meetings, we raise issues on governance, environmental, and social issues,” he said.

Chairman of the NBIM executive board Øystein Olsen, who is also governor of the central bank Norges Bank, added: “That does not mean that regularly we go public with any of these issues, but we do actually discuss them with the companies.”

NBIM said it aimed to vote at all general meetings, and that during 2016 it had voted at 11,294 shareholder meetings around the world.

“We are a large global investor with minority ownership in almost 9,000 companies,” Slyngstad said, adding that insight was a prerequisite for responsible management. 

“Good corporate governance and sustainable business practices will contribute to higher long-term returns”, he said.

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