The Norwegian Government Pension Fund Global has announced its divestiture of any interests in the miners of Glencore (GLEN), Anglo American (AAL), due to their role in the production and use of coal.
The German utility RWE (RWEG), the Australian energy firm AGL Energy (AGL) and the South African petrochemical firm Sasol (SOLJ) have also been listed.
Some might argue that there is a slight irony in Norway’s oft-dubbed “Oil Fund” playing the role of moral arbiter in the energy market and condemning the production and use of fossil fuels. However, the move should not come as a shock.
Despite the fact that oil revenues have contributed to much of the Scandinavian nation’s wealth, Norwegian politicians have increasingly moved decisively to promote the theory of anthropogenic climate change and urged the adoption of renewable energy.
In June 2019, the Norwegian parliament passed further strict regulations on coal investments, excluding firms that mine more than 20 million tonnes of, or generated more than 10 gigawatts of power from the material.
The fund, which holds around 1.5 per cent of globally listed shares, also put Uniper (UN01), Vistra Energy (VST) and BHP (BHP) on a watchlist for exclusion at a later date if their use of coal continued unchanged.
Responding to the decision, Anglo American stated: “We are working towards an exit from our remaining thermal coal operations in South Africa, ensuring that we do so responsibly.”
Although Anglo American and Glencore’s share prices have both fallen by over 3 per cent in Thursday trading, the announcement has not been as devastating as some had feared.
In the short term, coal still supplies around a quarter of the world's primary energy and two-fifths of its electricity. However, the well-regarded fund’s decision is expected to have a more gradual effect on investor sentiment in the long-term.