Norway wealth fund blacklists Glencore, other commodity giants over coal
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.
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 Australian 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% 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.
EXCESSIVE EMISSIONS
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.
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, which held stock worth $1.15 billion in these
companies at the end of 2019, said the companies were excluded for their carbon
dioxide emissions “from production of oil to oil sands.”
Canadian 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.
The head of the fund’s ethics watchdog told Reuters in March
that, once the first ones were published, others companies would follow.
Concrete and steel firms have also been probed, he said, without naming them.
COMPANIES RESPOND
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.
Sasol said it was implementing an “emission-reduction
framework underpinned by short and medium-term targets,” although it said coal
would continue to play role in South Africa during a transition to lower-carbon
energy sources.
Enel said it was developing its business in line with the
Paris climate accords, which seek to limit the rise in global temperatures to
1.5 degrees Celsius and cut emissions to zero by 2050.
Uniper said it was in a dialog with the fund about being
under observation for possible exclusion.
“Uniper in its strategic new focus has presented a clear
exit plan from coal and aims for climate-neutral power production in Europe by
2035,” said a company spokesman.
RWE said it had cut carbon dioxide emissions by 90 million
tonnes since 2012 and committed itself to becoming climate neutral by 2040. It
was investing around 5 billion euros in the expansion of renewables up to 2022.
“Instead of quantitative stock-taking, the speed with which
a company changes should be considered in our view,” said the company
spokesman. “Already today, we are among the globally leading companies for
renewable energies.”
Glencore, BHP and AGL Energy declined to comment.
Vistra Energy was not immediately available to comment.
Canadian Natural Resources, Cenovus Energy, Suncor Energy
and Imperial Oil did not respond to requests for comment after market hours.
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