(THIS ARTICLE IS MACHINE TRANSLATED by Google from Norwegian)
How green can a fund really be when it is built on the revenues from fossil oil and gas, and then reinvested in over 9000 international companies on the world's stock exchanges?
Money is counted on Norges Bank's website. The "market value of the Oil Fund" falls and increases by billions in seconds. 6 940 613 718 078 a given second on a Friday morning in February. The Government Pension Fund Global is therefore, and is, somewhere close to seven thousand NOK.
"We safeguard and develop financial value for future generations," is the message from Norges Bank investors. It is all divided into equity management, fixed income securities and real estate investments. In February, it became known that the fund that manages Norwegian savings will withdraw from 73 companies, of which 27 are coal-related companies. 16 of these are coal power companies, while 11 are coal mining companies. In addition, eight cement companies have been removed from the investment list. Thus, the fund became a microscopic notch greener.
A small, green step. "This is important because you see that the Petroleum Fund is starting to take in the responsible ethics that you have previously only talked about following. Now we finally see that the talk is followed by real actions, "says head of Greenpeace Norway Truls Gulowsen. "But this is just the beginning," he emphasizes. "In the case of coal alone, we have found over 120 companies with a revenue share from coal of 30 percent or more." In the spring of 2015, the Storting decided that the Petroleum Fund should withdraw from all companies that had more than 30 per cent of the income from coal.
To the Aftenposten, the head of the Oil Fund Yngve Slyngstad says that the Fund's own calculations show that "The Oil Fund emits 64 per cent more than Norway in general". While Norway emitted 2014 million tonnes of CO52 in 2, the Oil Fund's investments in international companies accounted for 87 million tonnes.
The fact that the Oil Fund – the world's largest pension fund – is now withdrawing from coal has attracted attention in international media. In 2015, The Guardian launched a long campaign for extracting investment in fossil industries inspired by, among others, US climate activist Bill McKibben. The British newspaper wrote on February 13 how fossil industries are now losing ground compared to renewable energy companies.
New green math. Coal in particular is a poor investment. Michael Liebreich, chairman of Bloomberg New Energy Finance, tells the British newspaper that "the value of coal is plummeting in all countries except India". But the fall in oil and gas prices is noticed in international financial environments. Liebreich talks about "a new math" in energy investment.
"I think we're witnessing investors also see the logic that bad ecology is the same as bad economics," says Gulowsen of Greenpeace.
Risk Information Group CEO Kjell-Ola Kleiven tells Ny Tid how environmental risk is being taken more and more seriously. "It is very timely for the Petroleum Fund to now draw green perspectives into the decisions around its investment. Green investment is clearly the boom of our time. Just look at Tesla, which is the most valuable carmaker these days, even though it makes relatively few cars. " Kleiven says that he in his customer group notices that Norwegian companies have become greener in their investment logic. It is about two things: “Firstly, companies and to some extent also states are concerned about reputation. In addition, several decision-makers have gained the necessary knowledge that they are in fact destroying the planet. "
In addition, he points out that new renewable energy technology gives priority to renewable companies over the old oil companies. “You almost throw money at everything that is green at the moment. However, whether what is considered green today is as green in a few years remains to be seen. ”
State Secretary in the Ministry of Finance Paal Bjørnestad (Frp) admits that risk plays a part in the decision-making process. “The Fund's special features as a long-term investor with a broad portfolio of companies means that risk associated with climate change and climate policy measures may have an impact on the future return of the Fund. Climate issues have therefore been central to the management of the fund for a long time. "
8000 companies under the radar. Thus, the Oil Fund invests in 9000 companies worldwide. The fact that the fund now withdraws from 73 of these is thus a relatively microscopic transfer of money. There will be well over 1000 of the 9000 companies that are closely monitored by the Norwegian Petroleum Fund through so-called active ownership, which will ensure that ethical rules in the environment, climate, child labor and water resources are followed.
“There are thus 8000 companies going under the radar. What happens to these companies, we do not know. There are not enough resources allocated and people hired to follow all these investments, ”says Gulowsen.
However, Secretary of State Bjørnestad claims that "the ethically based criteria in the guidelines for observation and exclusion apply to the entire fund's portfolio". He points out that the Council on Ethics gives advice to Norges Bank on "observation and exclusion of companies based on the criteria".
Greenpeace does not believe a green oil fund is possible. “A completely eco-friendly global investment fund is probably very difficult to achieve. But with the environmental requirements already there, there's still a lot of work to be done. ”
"Of course, the fund must be out of tar sands and coal, but the next step must be out of oil and gas as well."
Gulowsen
However, a completely fossil-free fund is within reach, the environmental organization believes.
“The fund must of course be out of tar sands and coal, but the next step must be out of oil and gas as well. Especially because global oil companies are devoting considerable resources to lobbying for continued oil recovery. But also because AS Norway already has great value invested in the oil sector through Statoil, jobs and so on. Then the economic risk becomes much greater because Norwegians' savings money is also invested in this market, ”says Gulowsen.
Should fear corruption. Risk analyst Kleiven doesn't think a complete green oil fund is possible. “It is impossible to be a completely green and ethically flawless global investment fund. The main point of the fund, after all, is to make money in a capitalist global market. Then something always goes wrong. Capitalism and green values can go hand in hand for a while, but something will end in the end. "
He believes that the Oil Fund should understand more about which markets it invests in. "It is quite right that the Oil Fund should be aware of climate and environmental challenges, but I believe there is an even greater challenge waiting for them. So far, the Oil Fund has had little focus on corruption. Corruption risk is the next big wave for the Oil Fund to throw at, ”says Kleiven.
