Norway’s sovereign fund to divest from oil exploration firms

The announcement marks the fund’s latest foray into fossil fuel divestment. In 2015, it notably pledged to offload holdings in firms that derive 30% or more of their turnover from coal. However, the fund has noted that it will stay invested in oil majors such as Shell, Total and BP. 

‘The objective is to reduce the vulnerability of our common wealth to a permanent oil price decline,’ explained the country’s Minister of Finance, Siv Jensen, in a statement. ‘Hence, it is more accurate to sell companies which explore and produce oil and gas, rather than selling a broadly diversified energy sector.’ 

In a white paper, the Norwegian Ministry of Finance said it anticipates that companies that do not have renewable energy as their main business will make up about 90% of growth in listed renewable energy infrastructure to 2030. Jensen said that the fund should be able to participate in this growth.

In its statement, the Ministry emphasised that a permanent reduction in the oil price would have long-term implications for public finances. However, it said that excluding energy stocks altogether could further reduce the oil price risk – but the effect of doing so would be limited. 

The fund has already reduced its oil price risk by extracting a large portion of the oil and gas resources on the Norwegian continental shelf and converting these into diversified financial holdings abroad. 

Divestment campaigners have largely welcomed Norway’s decision, while warning that further divestment will be necessary to meet global climate change targets. 

‘If it passes through parliament, this decision will deal a large blow to the illusion that the fossil fuel industry still has decades of business as usual ahead of it,’ said Yossi Cadan, a Senior Divestment Campaigner with the environmental NGO 350.org. ‘This should sound like a red alert for private banks and investors whose oil and gas assets are becoming increasingly risky.’ 

The Norwegian sovereign wealth fund holds almost £28bn in oil and gas stocks, and it will begin phasing out £6bn worth of exploration and production holdings once the decision is passed by lawmakers. 

Norway’s government still owns 67% of Equinor – formerly known as Statoil – which changed its name last year to signify a shift away from its primary oil and gas business.