Norway wealth fund gets green light for fossil fuel divestment

The world’s largest sovereign fund has been given permission to ditch investments in fossil fuels.

On Wednesday, the Norwegian Government voted into law for the Government Pension Fund Global to ditch investment in eight coal companies and 150 oil producers.

The Government Pension Fund Global was set up in 1990 to underpin long-term considerations when phasing petroleum revenues into the Norwegian economy.

Norges Bank Investment Management manages the fund on behalf of the Ministry of Finance, which owns the fund on behalf of the Norwegian people. 

The fund, that has a small stake in 9,158 companies, will drop coal investments worth an estimated $6bn, which could include shares in the mining company Glencore.

Despite divesting away from fossil fuels, the fund will retain stakes in oil companies, such as BP and Shell that are investing in clean technology.

The focus will now switch to investment in renewable energy, with the government proposing a cap of 2% of the fund within its so-called environment-related mandates, whose upper limit will be doubled to 120 billion kroner ($14 billion).

The decision by the Norwegian Government now puts pressure on other global funds to divest away from fossil fuels and invest in a more sustainable future.

This week, UK Prime Minister Theresa May announced that the UK would be the first G7 nation to set a legally binding target to cut carbon emissions to net zero by 2050.  

This new legally binding pledge will ensure that by 2050 the UK will eliminate its net contribution to greenhouse gas emissions by 2050, a commitment which will align with targets set at the Paris Agreement.

Photograph: Berardo62