Norway’s $US1 trillion ($A1.5 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 to toughen existing limits on coal investments by the world’s largest fund by excluding firms that mined more than 20 million tonnes of coal a year or generated more than 10 gigawatts of power from coal.
At the end of 2019, the fund held stocks worth $US1.6 billion in such companies, according to fund data.
Wednesday’s announcement, made in a statement issued by the fund, is the first to show the tougher rules being applied.
The fund, set up in 1996 to save Norway’s oil and gas revenues for future generations and which now holds about 1.5 per cent of globally listed shares, 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 set of firms stood at $US3.9 billion at the end of 2019.
The fund 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.
Parliament’s move last year tightened the funds existing rules that barred it from investing in a company that derived more than 30 per cent of its revenues or activities from coal.