World's largest wealth fund blacklists Glencore, other
giants over coal use
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[May 13, 2020] By
Gwladys Fouche and Terje Solsvik
OSLO (Reuters) - Norway's $1 trillion
wealth fund is excluding some of the world's biggest commodities firms
from its portfolio, including Glencore <GLEN.L> and Anglo American <AAL.L>,
because of their use and production of coal.
Underlining the growing role of climate considerations for long-term
investors, the fund is also excluding German utility RWE <RWEG.DE>,
South African petrochemicals firm Sasol <SOLJ.J> and Dutch company AGL
Energy <AGL.AX> over their use of coal.
Norway's parliament agreed in June 2019 that the world's largest fund
would no longer invest in companies that mined more than 20 million
tonnes of coal a year or generated more than 10 gigawatts (GW) of power
from coal.
Wednesday's announcement, made in a statement issued by the fund, is the
first to reveal the measure had been applied. The fund always sells
holdings before any exclusions are announced to avoid excessive market
movements.
Another set of companies - BHP <BHP.AX> <BHPB.L>, Uniper <UN01.DE>, Enel
<ENEI.MI> and Vistra Energy <VST.N> - were put under observation for
possible exclusion later if they did not address their use or production
of coal, the fund said.
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The fund, set up in 1996 to save for future generations Norway's
revenues that it earns from producing oil and gas, is among the world's
largest investors, owning around 1.5% of all globally listed shares.
It operates under ethical guidelines set by parliament and excludes
companies from its portfolio that do not respect them.
Its exclusions are often followed by other funds.
The fund also said it was excluding four Canadian oil firms for
producing excessive greenhouse gas emissions, the first time it has used
that reason to blacklist firms from its portfolio.
Canadian Natural Resources <CNQ.TO>, Cenovus Energy <CVE.TO>, Suncor
Energy <SU.TO>, and Imperial Oil <IMO.TO> were excluded for
"unacceptable greenhouse gas emissions", it said.
FINANCIAL TURMOIL
The fund said in Wednesday's announcement that it had taken a long time
to sell shares of several excluded firms due to the "market situation,
including liquidity in individual shares".
In recent weeks financial markets have been in turmoil because of the
novel coronavirus crisis.
Responding to Wednesday's 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.
Glencore declined to comment.
BHP, RWE, AGL Energy, Uniper, Vistra Energy, Enel and Sasol were not
immediately available for comment.
Canadian Natural Resources, Cenovus Energy, Suncor Energy and Imperial
Oil did not respond to requests for comment after market hours.
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![](../images/051320PIX/busine43.jpg)
The logo of commodities trader Glencore is pictured in front of the
company's headquarters in Baar, Switzerland, September 30,
2015..REUTERS/Arnd Wiegmann
![](http://archives.lincolndailynews.com/2020/May/13/images/ads/current/carpethouse_lda_BUSINESS_2020.png)
Parliament's decision last year setting coal output limits and limits on power
produced from coal tightened existing rules that said the fund was not allowed
to invest in a company that derived more than 30% of its revenues or activities
from coal.
"This is good news that the biggest producers of coal in absolute terms are
finally out of the fund," Else Hendel, acting environmental policy leader at
green group WWF Norway, told Reuters.
UNACCEPTABLE EMISSIONS
Excessive greenhouse gas emissions became a criterion for exclusion four years
ago, joining other grounds such as the production of nuclear arms, landmines and
tobacco, alongside human rights violations.
But it took several years before the board of the central bank, the fund's
ethics watchdog and Norway's Finance Ministry could agree on what constituted an
unacceptable amount of emissions.
The Council on Ethics had examined companies in the oil, cement and steel
sectors before recommending its first exclusions based on excessive greenhouse
gas pollution.
The council makes recommendations to exclude or to put on probation companies
that do not respect its ethical mandate. The board of the Norwegian central bank
then decides whether to act.
"This was a necessary first step to get some of the biggest climate problems out
of the oil fund," Martin Norman, Greenpeace Nordic's head of Sustainable Finance
Campaign, told Reuters.
"We expect this is just the beginning of the end for Norwegian money invested in
companies that obviously will not be part of a sustainable future."
The fund said three other companies had been excluded for causing environmental
damage, namely Egypt's ElSewedy Electric Co, Brazilian iron ore miner Vale SA
<VALE3.SA> and Brazilian power holding Eletrobras <ELET6.SA>.
Vale declined to comment. Eletrobras and ElSewedy could not immediately be
reached.
The fund can also reverse exclusions if companies address issues raised. On
Wednesday, it said New York-listed AECOM <ACM.N> and Hong Kong-listed Texwinca
Holdings Ltd <0321.HK> were again eligible for investment.
![](http://archives.lincolndailynews.com/2020/May/13/images/ads/current/graue_sda_2016.png)
AECOM had been excluded for involvement in the production of nuclear arms, a
business it has now discontinued, the fund said. Texwinca had been sidelined
over perceived breaches of workers' rights by a subsidiary that has since been
liquidated.
(Reporting by Ismail Shakil in Bengaluru, Terje Solsvik and Gwladys Fouche in
Oslo; Editing by Uttaresh.V and Andrew Heavens)
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