World's largest wealth fund blacklists Glencore
OSLO – Norway's $1-trillion wealth fund is excluding some of
the world's biggest commodities firms from its portfolio, including Glencore
and Anglo American, because of their use and production of coal.
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 that the world's
largest fund would no longer invest in companies that mined more than 20 million
tonnes of coal a year or generated more than 10 gigawatts (GW) of power from
coal.
Wednesday's announcement, made in a statement issued by the
fund, is the first to reveal the measure had been applied. The fund always
sells holdings before any exclusions are announced to avoid excessive market
movements.
Another set of companies - BHP , Uniper , Enel and Vistra
Energy - were put under observation for possible exclusion later if they did
not address their use or production of coal, the fund said.
The fund, set up in 1996 to save for future generations
Norway's revenues that it earns from producing oil and gas, is among the
world's largest investors, owning around 1.5% of all globally listed shares.
It operates under ethical guidelines set by parliament and
excludes companies from its portfolio that do not respect them.
Its exclusions are often followed by other funds.
The fund also said it was excluding four Canadian oil firms
for producing excessive greenhouse gas emissions, the first time it has used
that reason to blacklist firms from its portfolio.
Canadian Natural Resources, Cenovus Energy , Suncor Energy,
and Imperial Oil were excluded for "unacceptable greenhouse gas
emissions", it said.
FINANCIAL TURMOIL
The fund said in Wednesday's announcement that it had taken
a long time to sell shares of several excluded firms due to the "market
situation, including liquidity in individual shares".
In recent weeks financial markets have been in turmoil
because of the novel coronavirus crisis.
Responding to Wednesday's 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.
Glencore declined to comment.
BHP, RWE, AGL Energy, Uniper, Vistra Energy, Enel and Sasol
were not immediately available for comment.
Canadian Natural Resources, Cenovus Energy, Suncor Energy
and Imperial Oil did not respond to requests for comment after market hours.
Parliament's decision last year setting coal output limits
and limits on power produced from coal tightened existing rules that said the
fund was not allowed to invest in a company that derived more than 30% of its
revenues or activities from coal.
"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.
UNACCEPTABLE EMISSIONS
Excessive greenhouse gas emissions became a criterion for
exclusion four years ago, joining other grounds such as the production of
nuclear arms, landmines and tobacco, alongside human rights violations.
But it took several years before the board of the central
bank, the fund's ethics watchdog and Norway's Finance Ministry could agree on
what constituted an unacceptable amount of emissions.
The Council on Ethics had examined companies in the oil,
cement and steel sectors before recommending its first exclusions based on
excessive greenhouse gas pollution.
The council makes recommendations to exclude or to put on
probation companies that do not respect its ethical mandate. The board of the
Norwegian central bank then decides whether to act.
"This was a necessary first step to get some of the
biggest climate problems out of the oil fund," Martin Norman, Greenpeace
Nordic's head of Sustainable Finance Campaign, told Reuters.
"We expect this is just the beginning of the end for
Norwegian money invested in companies that obviously will not be part of a
sustainable future."
The fund said three other companies had been excluded for
causing environmental damage, namely Egypt's ElSewedy Electric Co, Brazilian
iron ore miner Vale SA and Brazilian power holding Eletrobras.
Vale declined to comment. Eletrobras and ElSewedy could not
immediately be reached.
The fund can also reverse exclusions if companies address
issues raised. On Wednesday, it said New York-listed AECOM and Hong Kong-listed
Texwinca Holdings were again eligible for investment.
AECOM had been excluded for involvement in the production of
nuclear arms, a business it has now discontinued, the fund said. Texwinca had
been sidelined over perceived breaches of workers' rights by a subsidiary that
has since been liquidated.
Comments
Post a Comment