Government advisers reject central banks proposal to sell billions held in oil stocks
Government advisers have urged Norway not to ditch oil and gas investments from its $1tn sovereign wealth fund, in a setback for those backing the worlds biggest fossil fuel divestment.
Norways central bank last year recommended the fund sell the billions it holds in oil stocks to avoid the risk of a permanent drop in crude prices.
However, a government-appointed commission has rejected the proposal, warning that a less diverse investment strategy would have major consequences for the funds returns.
A sale of energy stocks would challenge the current investment strategy of the fund, with broad diversification of the investments and a high threshold for exclusion, the commission said on Friday.
The Government Pension Fund Global was built off the oil and gas revenues that have made Norway rich.
It also has major holdings in international oil firms, including $6.14bn in Shell, followed by billions of dollars invested in other oil majors such as BP, Chevron, ExxonMobil and Total.
It has smaller stakes in the Italian oil firm Eni, the US oil firm ConocoPhillips and the US oil services group Schlumberger. Most oil company share prices have climbed in the past year along with crude prices.
Divesting those stocks was not an effective insurance against the substantial hit Norway faced to its tax take if its oil and gas sector was hurt by an oil price crash, the commission argued.
The commission, headed by the economist ystein Thgersen, said the funds existing investment strategy was simple, well-founded and has served the fund well.
Nicol Wojewoda, the Europe team leader at the climate campaign group 350.org, said: This summer Nordic heatwaves, wildfires in the Arctic Circle and alarming news of the thickest Arctic sea ice starting to break up, have brought climate change so close to home for Norway. It seems unthinkable to continue to invest in companies that have caused this chaos.
The government said a final decision would be made this autumn.
Siv Jensen, the minister of finance, said: Together with the advice from Norges Bank [the central bank] and the public consultation of the banks advice, this report will constitute a solid foundation for decision-making.
Norways state-owned oil company Statoil earlier this year rebranded itself as Equinor, to reflect what it said was its new role as a broad energy company.