BUSINESS
05/13/2020 12:51 EDT | Updated 05/13/2020 12:57 EDT

World's Largest Wealth Fund Blacklists 4 Canadian Oil Companies

Norway's massive sovereign wealth fund has significant influence on investors.

LISE ASERUD via Getty Images
Norway's Prime Minister, Erna Solberg, speaks at a press conference in Oslo, Norway, March 16, 2020. Norway’s $1 trillion wealth fund is excluding some of the world’s biggest commodities, oil and gas firms from its portfolio.

OSLO (Reuters) ― Norway’s $1 trillion wealth fund is excluding some of the world’s biggest commodities firms from its portfolio for their use and production of coal, including Glencore and Anglo American.

The fund, which operates under ethical guidelines set by parliament, also said it was excluding four Canadian oil companies for producing excessive greenhouse gas emissions, the first time it has used that reason to blacklist firms.

Watch: Norway to dump more than 100 oil and gas stocks. Story continues below.

 
 

Canadian Natural Resources, Cenovus Energy, Suncor Energy and Imperial Oil were excluded for “acts or omissions that on an aggregate company level lead to unacceptable greenhouse gas emissions”, it said.

The fund held stock worth $1.15 billion in these companies at the end of 2019.

Prime Minister Justin Trudeau said, in response to the fund’s exclusion of the four, that many oil companies understood the investment climate was changing because of concerns about climate change.

Excessive greenhouse gas emissions became a criterion for exclusion four years ago. But the central bank, the fund’s ethics watchdog and the finance ministry took time to agree on what constituted an unacceptable amount of emissions.

Wednesday’s announcement opens the way for more companies to be excluded on those grounds.

Coal users get the boot

Underlining the growing role of climate considerations for long-term investors, the fund is also excluding German utility RWE, South African petrochemicals firm Sasol and Dutch company AGL Energy over their use of coal.

Norway’s parliament agreed in June 2019 to toughen existing limits on coal investments by the world’s largest wealth fund by excluding companies that mined more than 20 million tonnes of coal a year or generated more than 10 gigawatts of power from coal.

The fund held stocks worth $1.6 billion in such companies at the end of 2019, according to fund data. Wednesday’s announcement is the first to show the tougher rules being applied.

The fund, set up in 1996 to save Norway’s oil revenues for future generations, now holds about 1.5 per cent of globally listed shares and its decisions are often followed by other investors. It sells holdings before announcing any exclusions to avoid excessive market moves.

The fund put another set of companies ― BHP, Uniper, Enel and Vistra Energy ― under observation for possible exclusion later if they did not address their use or production of coal.

The value of holdings in this group stood at $3.9 billion at the end of last year.

“This is good news that the biggest producers of coal in absolute terms are finally out of the fund,” Else Hendel, acting environmental policy leader at green group WWF Norway, told Reuters.

Responding to the announcement, Anglo American said: “We are working towards an exit from our remaining thermal coal operations in South Africa, ensuring that we do so responsibly.”

“We continue to examine suitable opportunities for our minority stake in Cerrejon,” it said, referring to a Colombian mining venture with BHP, Anglo American and Glencore.

Canadian Natural Resources, Cenovus Energy, Suncor Energy and Imperial Oil did not respond to requests for comment after market hours.

(Additional reporting by Reuters bureaux worldwide; Editing by Andrew Heavens/Edmund Blair/Jane Merriman/Pravin Char)