The Norwegian sovereign wealth fund has been ordered to divest all coal stocks, in a move that will prompt up to NOK50bn (€6bn) of equity sales.
A vote in the Norwegian parliament yesterday ended with agreement backed by all parties that the NOK6.9trn (€812bn) Government Pension Fund Global (GPFG) should sell off its holdings in companies which have 30% or more of their activities in the coal business.
Labour party MP Torstein Tvedt Solberg, who is a member of the parliamentary Finance Committee, said: “The decision made in parliament is a clear mandate for the fund to divest its coal mining and coal utility investments.”
The agreement in parliament was followed up today by a corresponding vote by the Finance Committee, he said.
Tvedt Solberg said it had been estimated that investments affected included between 70 and 80 companies with a share value of NOK40bn to NOK50bn.
“The vote in parliament sends a clear message, but the government will have to operationalise it and make a set of criteria to enforce the vote,” he said.
The GPFG would have until January 1st, 2016 to implement the divestment, he said, but added he believed that the fund had started the job today.
However, a full set of criteria for the divestment would have to be worked on, he said.
Earlier this month, the sovereign wealth fund said it had almost halved its exposure to thermal coal since the start of 2015, and now only had shares in firms where mining was one of several business areas.
It said it had divested seven coal mining companies.
Norwegian NGOs Greenpeace Norway and The Future in Our Hands, along with Germany’s Urgewald, welcomed the decision and said the GPFG was one of the top ten investors in the global coal industry.
Arild Hermstad of The Future in our Hands said coal was bad for all aspects of the environment and the primary threat to the climate.
“Such investments are not in line with the values of Norwegian society, and the unanimous vote of the Finance Committee means that this is now recognised across all party lines,” he said.
The NGOs said the decision meant the pension fund would now shed investments in companies such Germany’s RWE, China’s Shenhua, Duke Energy in the US, AGL Energy in Australia, Reliance Power in India, Japan’s Electric Power Development Corporation as well as Semirara Mining from the Philippines and Poland’s PGE.
In a report published earlier this month, the three NGOs said that although the GPFG had divested from 51 coal companies in 2014, the total sum of its coal industry holdings had grown by over NOK3bn since 2013, and was now NOK85.8bn.
This analysis showed the shortcomings of reports focusing only on divestment actions that did not say where funds had been reinvested, the report said.
“They serve to create the illusion that the pension fund’s coal portfolio has shrunken, while resources have, in fact, only been shifted from one coal company to the next,” it said.