The world’s richest sovereign wealth fund increased its stake in major oil and gas companies to £20bn in 2014, disappointing campaigners who argue it should continue to sell off its investments in the fossil fuels that drive climate change.
Norway’s Government Pension Fund Global (GPFG), which rose to £531bn in total, revealed in February that it had shed 32 coal mining companies due to concerns that action on global warming would cut their value.
Analysis by the green NGO Future In Our Hands of official data released on Friday shows the fund holds financial stakes in 90 of the top 100 oil and gas companies, as ranked by the amount of carbon in their reserves.
The fund, founded on the nation’s oil and gas wealth and which receives new capital each year, increased its ownership of 59 of the 90 companies. Despite the oil price crash leading to losses of over 10% on the fund’s oil and gas sector investments, the new stocks bought meant its overall holding in the 90 companies rose by £1.3bn.
The fund did sell off its shares in two Canadian tar sands companies – MEG Energy and Canada Oil Sands – together worth over £50m.
A series of analyses have shown that there are already several times more fossil fuels in proven reserves than can be burned if catastrophic global warming is to be avoided, as world leaders have pledged. Scientists say virtually all of Canada’s tar sands oil must stay in the ground, if climate change is to be tackled.
“Our pensions are increasingly being invested in oil and gas and this is a trend Norwegian politicians have a responsibility to stop,” said Arild Hermstad , head of Future In Our Hands. “The way the GPFG is behaving contradicts all established research on climate change.”
“There’s also a financial risk related to these investments, when we know that Europe, the US and China are heavily investing in renewable technology,” said Hermstad. “We expect renewable companies to gain better operating conditions in the time to come, and it’s a pity that the fund isn’t picking up on this trend.”
Martin Norman, from Greenpeace Norway, said GPFG remained heavily invested in Canadian tar sands, with large stakes in Suncor and TransCanada, the company wishing to build the controversial Keystone XL pipeline across the US.
Given the poor recent performance of fossil fuel investments, Norman said: “GPFG’s investments in fossil fuels is not only an environmental problem, but it is starting to become an economic problem as well. We believe the politicians must give a clear mandate to GPFG to pull out of coal, tar sands and other fossil fuels.” The fund’s investments are regulated by acts of parliament which have previously banned investing in weapons manufacturers and tobacco producers.
However, WWF welcomed an updated statement from GPFG on what it expects of companies in relation to climate change. One requirement is that companies should work out future business scenarios, including ones in which international action to limit global warming to 2C leads to sharp cuts in carbon emissions.
“If other funds follow suit, this could be the start of the tipping point the world needs to stop financing polluting energy, and start financing a better world,” said Samantha Smith, Leader, WWF Global Climate and Energy Initiative. ExxonMobil and Shell have said they do not believe the world’s governments will deliver deep cuts in carbon emissions.
Analysis of the fund’s coal investments is expected on Monday.
By Damian Carrington