Consumer Behavior Change

Norwegian Government Makes Largest Coal Divestment in History

The Norwegian parliament has unanimously voted for the Norwegian Government Pension Fund (GPFG) to adopt strong divestment criteria for companies involved in coal mining and coal fired utilities, including 49 companies and subsidiaries based in the United States.The GPFG is the world’s largest sovereign wealth fund and the new criteria will most likely force it to divest from 122 companies totaling $8.7 billion, according to calculations made by Urgewald, Greenpeace and Future in Our Hands.The exclusion criteria states that any company deriving more than 30 percent of its activity from coal will be excluded from GPFG’s portfolio, including both coal mining and coal fired utilities.

By Mike Hower | Published 9 years ago | About a 2 minute read

The Norwegian parliament has unanimously voted for the Norwegian Government Pension Fund (GPFG) to adopt strong divestment criteria for companies involved in coal mining and coal fired utilities, including 49 companies and subsidiaries based in the United States.

The GPFG is the world’s largest sovereign wealth fund and the new criteria will most likely force it to divest from 122 companies totaling $8.7 billion, according to calculations made by Urgewald, Greenpeace and Future in Our Hands.

The exclusion criteria states that any company deriving more than 30 percent of its activity from coal will be excluded from GPFG’s portfolio, including both coal mining and coal fired utilities.

An analysis of utilities’ current electricity generation mix shows that several major US utilities and power producers are among the companies facing divestment, including AES Corp, Alliant Energy, Ameren, American Electric Power, CMS Energy Corp, Dominion Resources, DTE Energy, Duke Energy, Empire District Electric, First Energy, Great Plains Energy, IDACORP, Integrys Energy Group, MidAmerican Energy, NRG Energy, OGE Energy Group, Otter Tail Corp, Pacificorp, PPL Corp, Southern Company, Vectren Corporation, Westar Energy, Wisconsin Energy Corp, and Xcel Energy.

The GPFG also holds bonds which could be divested, such as several subsidiaries of these US utilities. The GPFG had already announced divestments in 2014 from major US coal mining companies including Peabody Energy, Arch Coal, and Alpha Natural Resources. Peabody Energy unsuccessfully lobbied the GPFG against divesting from coal.

“This is the biggest divestment from coal in history and it should pave the way for other investors and countries to follow suit. It is a day for celebration, but the GPFG will not be rid of every coal company in its portfolio as well as tens of billions of dollars still invested in the oil and gas industry. Norway is also still engaged in Arctic oil drilling, so while this is great news, there is still lots of work to do for Norway before it can brand itself as truly climate friendly,” Truls Gulowsen, head of Greenpeace in Norway, said in a statement.

Fossil fuel divestment continues to gain traction among diverse groups around the world, from universities and churches to prominent investment funds. This momentum will need to continue to grow to ensure that 80 percent of global fossil fuel reserves remain unburned to avoid global warming more than two degrees above pre-industrial levels, the internationally accepted target for climate policy.

Redirecting this capital towards renewable energy and energy efficiency technology also will be critical for countries to meet their greenhouse gas reduction goals. Norway, Switzerland, Mexico, Canada and the US, as well as the 28-member European Union, have established ambitious emissions reduction goals ahead of the UN negotiations to be held in Paris later this year.

Mike Hower

Founder & Principal Consultant, Hower Impact

Mike Hower is the founder of Hower Impact — a boutique consultancy delivering best-in-class strategic communication advisory and support for corporate sustainability, ESG and climate tech.

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