By Kjetil Malkenes Hovland
OSLO-Norway's government Friday appointed a committee to assess
the most effective strategy for its massive oil fund to combat
climate change, including the potential divestment of about $80
billion worth of coal, oil and gas shares.
Norway's parliament is expected to decide in early 2015 whether
the $856 billion oil fund should sell its interests in coal and
petroleum companies or continue as an owner and assert pressure on
the companies to change course and cut carbon emissions. The fund
has said that about 10% of its assets are invested in oil, coal and
gas companies.
"The expert group will evaluate whether the exclusion of coal
and petroleum companies is a more effective strategy for addressing
climate issues and promoting future change than the exercise of
ownership and exertion of influence," said the Norwegian Ministry
of Finance.
The move has been welcomed by environmentalists who warned that
a potential global climate deal and a significantly higher price on
carbon emissions could force companies to leave some of their
resources in the ground.
Oil major Exxon Mobil Corp. (XOM) in a report this week said all
its resources would be produced, as it was "highly unlikely" that
the world agreed to restrict fossil fuel production in line with a
low-carbon scenario.
The Norwegian experts were asked to advise on the criteria for
the potential exclusion of such companies, the ministry said. The
government had been asked by parliament to prepare the evaluation,
in a push to consider whether the fund's financial muscle could
contribute to a global transition away from fossil fuels.
"Until now, the prevailing view has been that there is no need
for 'negative filtering' to exclude coal and petroleum companies
from the fund," the ministry said.
Norway's sovereign wealth fund, the world's largest, invests
money from the country's significant oil and gas revenues to
benefit future generations. Only a minor fraction of the fund is
spent each year.
The expert group will make its recommendations by the end of
November this year, the government said.
The committee will be chaired by Martin Skancke, an independent
adviser who used to work for the government. Other members are
Emeritus Professor Elroy Dimson of the London Business School,
Professor Michael Hoel of the University of Oslo and Professor
Laura Starks of the University of Texas.
The fund has expanded more than tenfold in the past decade and
is expected to be worth more than $1.2 trillion by 2020.
-Write to Kjetil Malkenes Hovland at
kjetilmalkenes.hovland@wsj.com
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