Norway's 1 trillion wealth fund excludes 12 companies over human rights & environmental concerns

On 13 May 2020, Norges Bank, which manages Norway's USD 1 trillion fund, announced its decision to exclude 12 companies from the Government Pension Fund Global due to environmental and human rights concerns. It placed a further four under observation.

Following recommendations by the Council on Ethics decided to exclude four Canadian companies (Canadian Natural Resources, Cenovus Energy, Suncor Energy and Imperial Oil) due to 'unacceptable climate gas emissions' linked to oil sand production. It is the first time this criterion has been applied to the fund's exclusion list. It also excluded ElSewedy Electric and Vale due to 'severe environmental damage' and Eletrobras due to 'serious human rights violations'. 

Norges Bank also excluded five companies (Sasol, RWE, Glencore, Anglo American & AGL Energy) on its own initiative due to new thresholds for product based coal, the first time this criterion has been applied. BHP, Vistra Energy, Enel and Uniper were placed under observation.

The articles linked below include comments from the companies, as well as from the Canadian Association of Petroleum Producers, of which all four Canadian companies are a member. More information is available below.

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14 May 2020

Norway Wealth Fund Blacklists Glencore, Other Commodity Giants Over Coal

Author: Reuters, New York Times

Norway's $1 trillion wealth fund is excluding some of the world's biggest commodities firms from its portfolio for their use and production of coal...

Norway's parliament agreed in June 2019 to toughen existing limits on coal investments by the world's largest wealth fund...

The fund put another set of companies ... under observation for possible exclusion later if they did not address their use or production of coal.

The value of holdings in this group stood at $3.9 billion at the end of last year...

The fund, which operates under ethical guidelines set by parliament, also said it was excluding four Canadian oil companies for producing excessive greenhouse gas emissions, the first time it has used that reason to blacklist firms...

Responding to the announcement, Anglo American said: "We are working towards an exit from our remaining thermal coal operations in South Africa, ensuring that we do so responsibly."

"We continue to examine suitable opportunities for our minority stake in Cerrejon," it said, referring to a Colombian mining venture with BHP, Anglo American and Glencore.

Sasol said it was implementing an "emission-reduction framework underpinned by short and medium-term targets," although it said coal would continue to play role in South Africa during a transition to lower-carbon energy sources.

Enel said it was developing its business in line with the Paris climate accords, which seek to limit the rise in global temperatures to 1.5 degrees Celsius and cut emissions to zero by 2050.

Uniper said it was in a dialogue with the fund about being under observation for possible exclusion.

"Uniper in its strategic new focus has presented a clear exit plan from coal and aims for climate-neutral power production in Europe by 2035," said a company spokesman.

RWE said it had cut carbon dioxide emissions by 90 million tonnes since 2012 and committed itself to becoming climate neutral by 2040. It was investing around 5 billion euros in the expansion of renewables up to 2022.

"Instead of quantitative stock-taking, the speed with which a company changes should be considered in our view," said the company spokesman. "Already today, we are among the globally leading companies for renewable energies."

Vistra Energy said it was looking forward to engaging with the fund about sustainability as it was in the process of transitioning away from coal, to a level that would put it well below the threshold that put the company on the fund's watch list.

Glencore, BHP and AGL Energy declined to comment.

Canadian Natural Resources, Cenovus Energy, Suncor Energy and Imperial Oil did not respond to requests for comment

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14 May 2020

Norway's wealth fund excludes Cdn oilsands investments over emissions

Author: Canada's National Observer

On Wednesday, Norges Bank Investment Management, which manages Norway's sovereign wealth fund, announced it would stop investing in Calgary-based Canadian Natural Resources Ltd., Cenovus Energy Inc., Suncor Energy Inc. and Imperial Oil Ltd. after concluding they produce unacceptable levels of greenhouse gas emissions...

The Canadian Association of Petroleum Producers criticized the bank's move, noting that the industry is making environmental progress as the country's leading investor in environmental protection and innovation.

"Attempts to stifle Canadian production by restricting financing can have only one effect; countries with lower environmental standards — and in many cases lower social, human rights and governance standards — will fill the void," said association CEO Tim McMillan...

All are on record as saying they have reduced GHG emission intensity in recent years and some have set targets for more reductions.

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13 May 2020

Brazil Ore, Power Giants Excluded From Norway’s Wealth Fund

Author: Bloomberg

Iconic Brazilian companies Vale SA and Eletrobras SA were removed from the world’s largest sovereign wealth fund due to environmental and human rights concerns...

Norges’s move deals a blow to Vale, which has taken steps to improve its image after a dam collapse early last year killed 270 people. The Rio de Janeiro-based mining company replaced its top manager, committed to decommissioning riskier dams, and built a treatment plant to clean up polluted water.

For Eletrobras, it’s also a reminder of the problems associated with the Belo Monte plant, where construction in the Amazon forest was marked by fierce opposition from environmental groups and a corruption scandal. Norges’s Council on Ethics said the project led to “increased pressure on indigenous lands, the disintegration of indigenous peoples’ social structures and the deterioration of their livelihoods,” with about 20,000 people displaced by the dam. The council also said the company has been involved in other projects that have been criticized for human rights violations. 

Eletrobras, controlled by the Brazilian government, said in a statement that it has taken “important strategic steps” to strengthen its commitment to human rights practices including closely monitoring subsidiaries like Belo Monte’s operator.

Vale declined to comment...

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13 May 2020

Government Pension Fund Global: Exclusion and observation of coal companies

Author: Norges Bank

Norges Bank’s Executive Board has decided to exclude the companies Sasol Ltd, RWE AG, Glencore PLC, AGL Energy Ltd and Anglo American PLC after an assessment against the product-based coal criteria...

The exclusions are based on the new absolute thresholds for coal companies that were added to the guidelines last year. The amendments took affect 1 September 2019. It is the first time these thresholds in the coal criterion are being applied...

The Executive Board has also decided to place the companies BHP Group Ltd/BHP Group Plc, Vistra Energy Corp, Enel SpA and Uniper SE on an observation list after an assessment against the product-based coal criterion...

In the assessment against the product-based coal criterion, importance shall also be given to forward-looking assessments, including any plans the company may have that will change the level of extraction of coal or coal power capacity realting to thermal coal, and/or increase the income ratio or business share relating to renewable sources...

For several of the companies of which exclusion is now being made public, the market situation, including the liquidity of individual shares, has meant that it has taken a long time to sell the shares in a reasonable manner. That explains why a long period of time has passed between some of the decisions and the bank’s publication.

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13 May 2020

Norway’s oil fund sells out of Glencore, Anglo American and RWE

Author: Richard Milne, Financial Times

Norway’s $1tn oil fund has sold out of some of the biggest names in commodities and utilities including Glencore, Anglo American and RWE after the world’s largest sovereign wealth fund decided they breached its guidelines on the use of coal…, also [selling] out of Brazilian mining company Vale due to “severe environmental damage”…and placed miner BHP, and utilities Enel, Uniper and Vistra Energy on an observation list…

Heffa Schücking, director of German environmental campaign group Urgewald, welcomed the fund’s divestments but expressed disappointment that companies including BHP was not on the exclusion list.

Norway’s parliament…tightened the rules about what the oil fund can invest in, [excluding] big coal extractors and users to producers of tobacco, nuclear weapons and cluster bombs. The fund estimates that such product-based exclusions lower its investment returns but bans based on conduct, such as that for Vale, lift them.

[The fund]…is able reverse exclusions if companies react and reduce their exposure to coal. The oil fund also announced on Wednesday that it had for the first time sold out of companies due to unacceptable greenhouse gas emissions…, also [barring]…Elsewedy Electric due to…“severe environmental damage” and Brazil’s Eletrobras for “systematic human rights violations”…

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13 May 2020

Trudeau says wealth fund blacklisting of Alberta companies a wake-up call on climate change action

Author: Thomson Reuters, CBC

Prime Minister Justin Trudeau says news that one of the world's largest investment funds will exclude four Canadian oilsands producers from consideration for investing is part of a continuing shift in global attitudes for which oil companies will have to adjust...

"We've seen investors around the world looking at the risks associated with climate change as an integral part of investment decisions they make," said Trudeau on Wednesday in response to a reporter's question...

Carbon emissions became a criterion for exclusion from the fund four years ago, and in 2017 the Council on Ethics recommended "a small handful" of firms be blacklisted for producing too much greenhouse gas emissions in either the oil, cement and steel sectors...

Cenovus's CEO said the company is focused on its environmental footprint.

"Pulling investments from the oilsands and claiming it's for climate change reasons is more about publicity than fact," Alex Pourbaix said in a statement.

"Cenovus has reduced the GHG emissions intensity at our oilsands operations by approximately 30 per cent over the past 15 years. And we've set ambitious targets to reduce our emissions intensity by another 30 per cent across our operations by 2030 and hold absolute emissions flat during that time."

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13 May 2020

World's biggest wealth fund blacklists 4 Canadian firms for greenhouse emissions

Author: Reuters

The Norwegian central bank on Wednesday excluded four Canadian oil and gas companies from its $1-trillion wealth fund, the world’s largest, for producing too much greenhouse gas emissions, its first use of carbon emissions as a criterion to blacklist firms.

Canadian Natural Resources Ltd, Cenovus Energy Inc , Suncor Energy Inc, and Imperial Oil Ltd were excluded from the fund due to "unacceptable greenhouse gas emissions", Norges Bank said in a statement here

The decision was based on recommendations from the Council on Ethics, the fund’s ethics watchdog, because of the companies’ carbon emissions from production of oil to oil sands, the central bank said.

Carbon emissions became a criterion for exclusion from the fund four years ago, and in 2017 the Council on Ethics recommended “a small handful” of firms be blacklisted for producing too much greenhouse gas emissions in either the oil, cement and steel sectors.

Norges Bank also excluded three other companies - Egypt’s ElSewedy Electric Co, Brazilian iron ore miner Vale SA , and Brazilian power holding Eletrobras - for causing severe environmental damage.

Vale declined to comment, while the four Canadian firms did not respond to requests for a comment... ElSewedy could not immediately be reached.

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