Norway Oil Fund Divests Risky Assets - WSJ

Fund Has Divested Itself From 114 Companies in the Past Three Years.

Norway’s sovereign-wealth fund on Thursday said it divested itself from 49 risky assets in 2014 due to uncertainty about the sustainability of their business models.

The world’s biggest fund, which has been built on the country’s oil and gas revenues, said it divested from companies that could be exposed to new climate and environmental regulations. The companies were predominantly in coal and gold mining.

“We have gradually increased the scope of risk-based divestments, both geographically and thematically,” said the fund’s Chief Executive Yngve Slyngstad. “In total, we have divested from 114 companies in the past three years.”

Out of those divestments, 43 were exited due to the risk of deforestation, 35 due to water management issues, 22 on climate-related risks, and 14 companies were divested due to other, unnamed risks, the fund said.

The figures were published in the fund’s first report on responsible investment.

The $861 billion fund said it conducts risk assessments at company, sector and country level, and that it reviewed last year the impact of oil sands production on climate change and water management, the climate impact of coal-based electricity production, and the sustainability of mining and paper companies.

However, Norway’s central bank, which oversees the fund’s management, warned against using the fund as a climate policy tool in a way that could interfere with its financial targets.

The fund voted on 10,519 general meetings in 2014, and currently makes its voting record public shortly after casting the vote. As of 2015, the fund plans to make its votes known in advance of important general meetings, in cases where such a move can be expected to affect the outcome of the vote.

Norway’s oil fund held 2,641 meetings last year with companies where it held shares, and has prepared special documents detailing its expectations on water management, children’s rights and climate change.

The fund is also mandated to exclude from its portfolio companies producing tobacco, nuclear weapons, and land mines, and companies that break human rights or damage the environment. Read More at Norway Oil Fund

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