World’s largest wealth fund pulls US$1.6bn from coal companies, puts BHP on notice

World's largest wealth fund Norges Bank Investment Fund coal oil
The US$1 trillion Norges Bank Investment Fund has dumped its interest in coal miners and oilsands producers, citing climate change as its motive.

Norway’s huge sovereign wealth fund which made its money largely from oil (a fossil fuel) has dumped its stakes in companies that use coal (another fossil fuel), blacklisting players across the globe from Swiss-based Glencore to Australia’s AGL Energy (ASX: AGL).

The US$1 trillion Norges Bank Investment Fund (also known just as “the oil fund”), the world’s largest sovereign wealth fund, has blacklisted not only coal companies that produce or use coal, but also Canadian oilsands producers as it invokes the cause of climate change and fossil fuel emissions as its reasons for the move.

Other European banks have divested their oilsands investments on the grounds that the process of extracting synthetic crude oil from bitumen destroys the landscape and causes very high emissions.

The fund, managed by Norges Bank, the country’s central bank, owns about 1.5% of all shares traded in the world and its investments in the newly blacklisted companies totalled about US$1.6 billion (A$2.49 billion).

The fund was established in 1996 to invest Norway’s revenue from the North Sea oil and gas fields to provide finance for future generations. Its global portfolio consists of more than 9,200 companies.

AGL hit for mining, burning coal

AGL joined the list for owning the Loy Yang coal mine in Victoria and the Liddell power station in NSW.

German power utility RWE is also on the list of companies that have been blacklisted.

BHP (ASX: BHP) has been put the “observation list”, a type of probation, which means it is at risk of divestment. BHP owns a coal mine in Colombia in partnership with Anglo American and Glencore.

The Norwegians have adopted the rule they will pull their investments from companies that get at least 30% of their income from thermal coal, or base 30% or more of their operations on thermal coal, or produce more than 10,000 megawatts of power from burning thermal coal.

But it should be noted — this standard does not apply to coking coal, used mainly in steelmaking, and which also produces emissions alleged to cause climate change.

More companies may be blacklisted

Among the others blacklisted are mining giant Anglo American and South African petrochemicals firm Sasol (which operates six coal mines and was founded in 1950 to use German technology that turns coal into synthetic oil products), and four Canadian oilsands miners.

Glencore was clearly a prime target: it operates 26 coal mines across Australian, Colombia and South Africa and loads 86.7 million tonnes per year of thermal coal on to bulk carriers.

The fund has other companies on its to-do list, indicating in March it was probing concrete and steel firms.

Meanwhile, seven other company investments have been cut loose by the fund on ethical grounds, including Brazilian iron ore miner Vale after 270 people died when one of its tailing dams collapsed and, also from Brazil, electricity firm Eletrobras on grounds of alleged violations of human rights on Brazil’s indigenous people.