World’s second largest sovereign wealth fund follows Bellona advice

Publish date: April 5, 2009

Written by: Anne Karin Sæther

Bellona has achieved a full breakthrough for its concrete demands on how Norway’s sovereign wealth fund – known as the Government Pension Fund – Global (GPF) or the Oil Fund – can become more environmentally friendly. “Now the Fund can be Norway’s most important international voice,” said Marius Holm, Bellona’s vice president.

The new Bellona inspired initiatives now being proposed for the Fund could make it one of the country’s most important international voices.

A new Government communication

Friday, Norwegian Finance Minister Kristin Halvorsen presented a Government communication to the Parliament about the future management of the Fund. She made it clear that the Government will provide for a broad study of the effect of climate change on financial markets and establish a new environmental and developing country investment programme.  

The Government has suggested earmarking NOK 20bn (about €2.5bn) for investments in environmental assets and developing countries. The Fund will also enact several other environmentally related changes in the way the fund works.

The Fund will also elaborate a so-called “Investor’s Expectations” document on environment and climate change for use by the Fund’s managers in the exercise of their ownership rights at general assemblies.

The Government communication draws heavily on a public consultation last year on the ethical guidelines of the Fund, and all the three major novelties mirror suggestions by Bellona in this consultation.
“This is a good start, and it shows that the government acknowledges that the climate will influence the long term yield of the Oil Fund,” Bellona President Frederic Hauge said.  
[picture1 left] “We appreciate that the government has heard Bellona’s advice and has chosen to use the Fund more actively in the fight on climate change,” said Hauge.

Bellona has also demanded a comprehensive climate vision for the Fund, whereby all equity investments by 2020 should be in companies with a strategy for remaining competitive in an emissions free society.

Norway as a pioneer
Bellona’s Holm says that the Fund, with the steps that have been taken, could become Norway’s most important international voice.  

“Norway is a small country with a very large sovereign wealth fund, and this fund can in a meaningful way contribute to a positive development internationally. Money talks,” said Holm.

“The Fund’s environmental demands will have a strong signaling effect, and Norway can be someone that other institutional investors follow when it comes to transparency and climate protection,” he added.

The government has taken Bellona’s advice to heart, and singled out its efforts for special attention.

Few like Bellona
The Finance Ministry’s Secretary of State Roger Schjerva said that Bellona has had a significant impact.

“There are few that can recognise so many of their own demands and proposals in this communication as Bellona. They have made a significant impact,” he said.

“Bellona proposed that we must have a screening of the whole portfolio to consider the “CO2 risk” of companies, and the proposal is reflected in our proposal for an international investigation of the impact of climate change on financial markets, said Schjerva, adding, “it is critical that investors have started to take into account the expectation of dramatically higher prices for CO2 emissions.”

Future directed enterprises
Schjerva pointed out that Bellona also proposed that the Fund should be an active investor in proactive climate friendly enterprises.

“The proposal is reflected in our proposal about an environmental investment programme, which will put a lot of weight on developing pioneering projects within climate friendly energy,” Schjerva said.

“A third important proposal from Bellona is the ‘Investor’s Expectations-document’ that we as investors will use to clarify our expectations tied to the environment to all businesses we in invest in, as we have done in child labour,” he said.

“In the Investor’s Expectations-document we will, among other things, lay down a demand that businesses recognise climate threats, and not work against an ambitious climate policy and that businesses must be open about their own emissions,” elaborated Schjerva.

Bellona will commit further
Bellona’s Holm praises the government for having understood the significance of climate friendly investment.

“It is reasonable with green investments when one should attend to our savings for the future,” he said.

“We are pleased that there will be a specific investment programme for the environment, and we support the initiative for an economic climate investigation like the one that Lord Nicholas Stern carried out. Bellona lays a basis that the climate threat has a clear influence on the economy, and that in the long view it will not be worthwhile to invest in dirty, polluting businesses,” Holm said.   

“We appreciate that the Government has so clearly taken our advice, and that we have put in place a good foundation for further work. We willingly commit when all the concrete details come together,” he said.

Eivind Hoff contributed to this report from Brussels.