As much as NOK300bn (€30.8bn) could be divested from energy stocks by Norway’s giant sovereign wealth fund.
The Norwegian Ministry of Finance has tasked a group of experts with reviewing whether the NOK8.1trn (€830bn) Government Pension Fund Global (GPFG) should drop all energy stocks from its portfolio – including companies involved in renewable energy.
It follows advice received in November from the fund’s manager, Norges Bank, to remove the oil and gas sector from the fund’s equity benchmark index.
The bank argued that offloading the stocks would make the government’s overall wealth less vulnerable to a permanent drop in oil and gas prices, taking account not only of the GPFG’s investments but also the government’s stake in oil firm Statoil.
Siv Jensen, Norway’s minister of finance, said: “The government seeks a broad basis for its decision. The issue must be thoroughly examined, as is the case for all important matters in the management of the GPFG.”
The ministry said it wanted the expert group to consider divestment from FTSE Russell’s energy sector indices, which are to be adjusted at the end of this year as part of a wider overhaul of the company’s benchmarks. The sector includes alternative fuels and renewable energy equipment stocks, and from 1 January 2019 will also include coal companies.
The GPFG currently invests roughly 4% of its portfolio in the sector, worth roughly NOK300bn.
The ministry has also launched a public consultation on the issue, and has written to Norges Bank asking for additional information about the proposed divestment of the stocks.
The group will be chaired by Øystein Thøgersen, professor and rector at NHH Norwegian School of Economics. Other members include Harald Magnus Andreassen, chief economist at Sparebank 1 Markets, and Olaug Svarva, the former chief executive of Folketrygdfondet, which manages the Nordic investment segment of the country’s sovereign wealth assets.
In its letter to Norges Bank, the ministry said it wanted more information on some aspects on the advice already received, including the basis for recommending a larger deviation between the fund’s benchmark index and the investment universe.
“In this way, the bank can continue to invest in companies in that sector, for example, within renewable energy, by deviating from the reference index within the given risk limits,” it wrote.
The government aimed to conclude the matter this autumn, the ministry said.