Norway oil fund goes green

Reuters reported on 14 Aug 2009 that Norway’s $380 billion oil fund seeked more influence over how thousands of companies in which it holds stock tackle climate change, and mold a blueprint for ‘green’ activism by institutional investors.

The fund will publish a report later in the day about its expectations for company management of environmental issues. Norway’s wealth fund, the biggest owner of European stocks, believes that environmental factors may sooner or later hit earnings and profitability of the companies it owns and sees its green ambitions as part its wider push for long-term profits.

Commonly known as the “oil fund,” the Government Pension Fund – Global invests Norway’s oil and gas wealth in foreign stocks and bonds to save for when the black gold runs out. It is the world’s 2nd largest sovereign wealth fund after that of the United Arab Emirates, and held 1.3% of all listed European stocks at the end of 2008.

Individual companies’ “green” grades will not be published but privately shared with the corporations. Continued poor performance may catch the eye of the fund’s ethics council, which has blacklisted firms on environmental grounds.

Another new priority for the fund is dealing with water management, said Anne Kvam, head of corporate governance at the fund,  because continued availability of water resources will have a “huge impact” on how the Norwegian fund will develop in the decades to come. Kvam said water was an important input or production factor for about 1,100 companies in the fund’s current portfolio, whose combined market value is some $43 billion. “The shortage of water and increased demand is going to create risks for huge amounts of companies going forward and we as investors need to know that the companies are managing these risks,” she said.

You can read some interesting articles on the Norway’s wealth fund:
Citizen dividends and oil resource rents, a focus on Alaska, Norway and Nigeria
Norway’s oil fund shows the way for wealth funds
Norway SWF swells in Q2 2009, owns 1% global stocks
Norway pension fund loses $92m in 2008
Norway’s Global fund prides itself on transparency