Norway’s sovereign wealth fund (SWF) has brought six companies back into its investment universe, which were previously banned because of their coal operations, and ended its observation of two large holdings – after all companies reduced their exposure to the controversial fossil fuel.
Norges Bank Investment Management (NBIM), which manages the NOK19trn (€1.6trn) Government Pension Fund Global (GPFG), said it is revoking the exclusions of US firm TXNM Energy, Greek company Public Power Corp, and Canadian businesses Capital Power Corp and TransAlta Corp, along with the blacklistings of Poland’s Jastrzebska Spolka Weglowa, and Brazilian company Eneva.
All six companies were blacklisted by NBIM back in 2016 and 2017 for having coal power production that exceeded 30% of total power production, or – in the case of the Polish company – because it received more than 30% of its revenue from the extraction of thermal coal.
In May 2015, NBIM was ordered to divest all holdings in companies with more than 30% of their activities in the coal business from the SWF, following a vote in the Norwegian parliament.
Prior to 2015, the GPFG had amounts of less than NOK170m in each of the six stocks that have now been made investable for the fund once more.
NBIM also said in the announcement released late yesterday that two stocks which weighed more heavily in its portfolio – Australian firm BHP Group and Southern Co of the US – were having their observation status revoked.
Back in 2020, NBIM said, it had assessed that BHP Group’s extraction of thermal coal exceeded the absolute limit specified in the GPFG’s coal criterion.
“Since then, BHP Group has reduced its production of thermal coal each year. From 2021 onwards, production has been below the threshold,” the Oslo-based central bank arm said, adding that observation was therefore no longer considered appropriate for BHP.
Southern Co, meanwhile, having been put under observation in 2016 based on its coal-based power production, had since then reduced its capacity and production of coal power and was now well below the threshold, NBIM said.
At the end of June, the SWF had NOK22.7bn invested in the shares of BHP Group, and NOK8.54bn in Southern Co equities.
Asked for comment on the significance of the batch of re-inclusions, a spokeswoman for NBIM told IPE that the organisation reviewed the status and exposure of all excluded and observation companies related to the coal criterion on an ongoing basis.
“We note that in many countries, there are clear shifts to decarbonisation, and a reduction in exposure to thermal coal is a natural part of the journey,” she said.
“The re-inclusions and removal of observation is a natural consequence of this transition,” the NBIM spokeswoman said.
Following these changes of status for the eight stocks, NBIM still has around 170 companies either under observation or excluded from the fund because of production of coal or coal-based energy.
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