Thursday, November 16, 2017

Norway’s $1 Trillion Pension Fund Wants To Ditch All Oil And Gas Stocks

Via Business Insider:

Norway's trillion-dollar sovereign wealth fund is proposing to drop oil and gas companies from its benchmark index.

The Central Bank of Norway, which runs the fund, sent a proposal to the Ministry of Finance today.

The aim is primarily to reduce the fund’s exposure to oil price fluctuations.

Norway’s trillion-dollar sovereign wealth fund is proposing to sell off all its holdings in oil and gas companies.

In a letter sent to the Ministry of Finance today, the The Norwegian Central Bank, which runs the Sovereign Wealth Fund, said the move would make it “less vulnerable to a permanent drop in oil and gas prices”.

Around six percent of the fund’s holdings, or $37 billion, consist of oil- and gas stocks such as BP, Royal Dutch Shell and ExxonMobil. The fund’s exposure to fossil fuel markets is currently double that of a standard global fund, the Central Bank said.

"This advice is based exclusively on financial arguments and analyses of the government's total oil and gas exposure and does not reflect any particular view of future movements in oil and gas prices or the profitability or sustainability of the oil and gas sector", said Deputy Governor Egil Matsen in a press release.

Norges Bank further said a divestment would not affect the fund’s projected returns, nor would it raise its risk profile. The proposal is based on the oil and gas sector as defined by the FTSE reference index.

The decision now rests with the Norwegian Ministry of Finance. If the government and the parliament reach a unanimous decision on the matter, a final approval could take place next summer, reports Norwegian site E24.

The Government Pension Fund of Norway, which recently surpassed one trillion dollars in value, is the world’s largest sovereign wealth fund. It invests Norway’s revenues from oil and gas production in stocks, bonds and real estate.

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