With great (financial) power, comes great (moral) responsibility

It’s time for the world’s largest national fund to stop profiting from climate destruction

It is no longer conceivable to speak about climate change in abstract terms. The reality is stark with news of extreme weather events making the headlines almost daily. Unfortunately these disasters have given contemporary society a cruel feel of what may lie ahead if the world doesn’t promptly veer away from its current dependence on fossil fuels.

While communities worldwide, particularly those at the frontline of these climate impacts, continue to valiantly resist this crisis by adapting and implementing climate solutions, some governments have given headway with regards to policies that aim to transition the global economy to one powered by renewable sources of energy.

A recent example is in Norway’s state-owned electricity company Statkraft revealing plans to invest $8.1 billion in renewable energy projects. This decision being seen as an example of how public finance could unlock increased investments in the green economy. But it is difficult, if not impossible, to laud the intentions of the Norwegian government when taking note of a particularly stark contradiction.

Even though Norway has achieved impressive progress by becoming one of the few countries in the world fully powered by renewable energy, its Sovereign Wealth Fund, (which happens to be the largest in the world with holdings assets valued at over $867 billion), continues to get richer from decades of exploiting vast oil and gas reserves. In fact, Norway is the world’s 8th largest investor in coal, with billions invested in companies that mine and burn coal overlooking the fact that the coal industry not only contributes to climate change, but every year it’s responsible for 800,000 premature deaths around the world, polluting our air, rivers and communities.

Right now the Norwegian government stands at a crucial crossroads. It has the chance to shift its dirty savings of the past into a positive future impact for all. Today the fund’s investment policy comes under review in the Norwegian Parliament, and the country has a unique opportunity to stop profiting from the disaster its investments are causing, by divesting from fossil fuels, starting with coal. Moving out of coal would be a small step for Norway, with 2 out of 3 Norwegians being in favour of it, but with significant implications for the international community. In a world where coal’s future is one of terminal decline, the Norwegian government can both protect its stakeholder investments and the planet if it leaves coal behind.

A recent study by the Institute for Energy Economics and Financial Analysis (IEEFA) has shown that the coal industry is arguably the ‘poorest-performing sector’ in the global economy noting that coal-company stock prices have collapsed in recent years while stocks of coal-burning utilities are in decline too. The Stowe Global Coal Index shows that coal lost 71 per cent of its value over the past five years and, with renewables booming, coal’s place in the global industry energy mix will continue to shrink.

Last week, new research showed that, despite shedding stocks from dozens of coal companies last year, the companies in the Norwegian Sovereign Wealth Fund’s portfolio still account for nearly a quarter of annual global coal production, meaning the fund is exposed to the risks outlined by the IEFFA analysis. Currently, the fund’s coal-sector holdings are up to USD 10-15 billion (depending on the exclusion criteria), which means that if the Norwegian government votes to divest from coal, it would be the biggest win for the divestment movement to date with the potential for a domino effect to ripple through the investment sector at large, as confirmed by financial experts.

But divesting from coal and all fossil fuels not only makes sense financially, it is also the moral and environmental responsibility of the Norwegian government to the world. The truth of the matter is that there is simply no more space for coal if the world is to remain below the internationally agreed guardrail of 2 degree Celsius temperature rise, much less the 1.5 degree Celsius many say is needed to avoid the worst climate impacts. The coal stocks still in Norway’s wealth fund and its investments in Chinese coal alone account for emissions 19 times higher than those Norway emits each year. The truth of the matter is that the world simply cannot survive the consequences of these investments. In the words of Ariana Kassman from Papua New Guinea while relaying a message to the Norwegian government “climate change is threatening our existence. I call on you to help us save humanity by divesting your money today.”

It’s time for the largest national fund in the world to stop profiting from climate destruction.

Originally published by Thomson Reuters Foundation News here.

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