Norway Sovereign Wealth Fund is big…. Norway is the holder of the largest sovereign wealth fund in the world, and it is set to pressurize oil companies to report on climate change risks.
The sovereign wealth fund, which is worth $872 billion, said it would press ExxonMobil and Chevron in order for them to file more complete reports on the risks and opportunities presented by a changing climate, according to Reuters, as the companies come under pressure over disclosures related to climate risks.
Norway to pressurize Exxon and Chevron
Shareholder proposals have been submitted which ask for the new measures to be implemented. However the boards of both ExxonMobil and Chevron oppose the initiative.
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Now Norway Sovereign Wealth Fund said that it will support the motion. Both Royal Dutch Shell and BP updated their policies in a similar way last year as a result of pressure from shareholders, however Exxon and Chevron believe they are doing enough to report on climate risks.
“We want them to be open about their climate strategy and their dialogue with regulators,” the fund’s chief executive Yngve Slyngstad told reporters. He said that companies should be more transparent about the risks posed by floods and storms caused by climate change as well as government policies on carbon emissions.
Norway Sovereign Wealth Fund committed to fighting climate change
The SWF is backed by money made from Norway’s oil and gas wealth. It is making similar demands of other oil companies around the world, and would continue to do so, said Slyngstad.
“We will then come back next year and the year after,” he said. Data provided by Thomson Reuters shows that Norges Bank Investment Management (NBIM), which manages the fund, was the seventh-largest shareholder of both firms at the end of 2015.
The fund owns around 1% of listed equities worldwide. Slyngstad said many companies had committed to cutting carbon emissions by 40% in coming years, as part of an accord reached at the Paris summit on climate change.
Companies “have to explain if they don’t intend to reduce their emissions to that extent,” he said.
Last year Norway’s parliament told the fund to divest from 52 companies that make more than 30% of their turnover from coal. The fund may now exclude 42 more.
Slyngstad said that it was hard for the fund to set firm rules. “The fund is like a supertanker, It takes some time to turn it,” he said.
Of course, there could be an alternative reason… many funds like to sell when an asset is losing and nothing has been more unpopular than coal and energy over the past few years. If so, this could be a good contrarian buy indicator.