Norwegian Sovereign Wealth Fund Sheds Billions Amid Fossil Fuel Avoidance

One of two sovereign wealth Funds Operated by Norway The entity was forced to divest from certain entities, resulting in losses Energy Companies miss the opportunity to make huge returns on the sector.

The Government Pension Fund Global is which Manages Assets totalling more than $1.3 Trillion were reported as a loss last year of $163Billion, representing 14.1% of the overall fund. Performance was slightly below the 12.8% drop in the STOXX 600 Index. This index tracks major European companies.

“The market was impacted by war in Europe, high inflation, and rising interest rates,” Nicolai Tangen, CEO of Norges Bank Investment Management said in a Statement. “This negatively impacted both the equity market and bond market at the same time, which is very unusual. All the sectors in the equity market had negative returns, with the exception of energy.”

The Norwegian Parliament has been able to withstand the huge returns in the energy sector. Decent That “the fund should not be invested in companies that contribute to violations of fundamental ethical norms,” These include those that “base their operations on coal.” The Norwegian Ministry of Finance also has ethics guidelines Guidelines for the fund’s investments such that managers cannot devote money toward companies that “do not conform to prevailing technological, regulatory or environmental trends” Or impose “substantial costs on other companies and society as a whole.”

The Government Pension Fund Global has not been established. permitted Although managers are allowed to allocate funds to companies that produce or explore petroleum, they may not be able to invest in those that refine the fuel. The fund includes, among other entities, Barred The fund recommends investing in Imperial Oil, Canada’s second-largest oil producer. Even though Imperial Oil believes it produces, the fund is not convinced. “unacceptable greenhouse gas emissions,” Over the past year, the stock market returned 27.4% for the company.

Funds that subscribe to the ESG (environmental, social and corporate governance) movement have suffered. Heavy losses The past year. Harvard Management Company, which manages the elite university’s endowment, recently admitted Even though the company is still around, its $2.3 Billion loss can be attributed to fossil fuel divestment initiatives. “proud to be deeply engaged in the issue of sustainability.”

ESG critics claim that the strategy seeks to achieve outcomes in politics and social causes such as reducing carbon emission and increasing racial diversity in a way that compromises the maximization and profit.

Trump’s Government Regulators Barred American pension funds are available from “selecting investments based on non-pecuniary considerations” These were necessary for their safety. “base investment decisions on financial factors” alone. To protect the economy, however, the Biden administration is trying to reverse the prohibition. “climate-related financial risk that may threaten the life savings and pensions of America’s workers and families.”

Norway’s Government Pension Fund Global was established in 1990 to invest surplus revenues from the country’s oil sector. Arne Jon isachsen, Norwegian economist, and Thorvaldur Gylfason from Iceland were recently interviewed for an article. Article Norway for the International Monetary Fund “ought to quit pocketing its oil profits and start giving the money to countries that need help meeting their Paris Agreement climate change goals.”

“If Norway‘s future oil and gas revenues can help the global green shift, there would be good reason to continue pumping from the Norwegian shelf,” they wrote. “In this scenario, Norway’s extraction of fossil fuels would become fundamentally different from that of other countries.”