The World’s Biggest Sovereign Wealth Fund Is Dumping Coal
Divestment is working. Starting in 2016, the coal industry is set to lose billions of dollars.
The Stortinget. Image: Tm, Wikimedia
The largest sovereign wealth fund in the world is worth $900 billion, and it is about to start ditching its coal investments. The Norwegian Government Pension Fund Global—colloquially known as Norway's oil fund—will begin shedding investments in any company that derives more than 30 percent of their revenue or energy production from coal, beginning in 2016. Coal remains the biggest contributor to global climate change.
That's divestment in action; that's an estimated $11 billion that coal companies around the world now stand to lose. That's a huge win for a movement that many insist on writing off as ineffectual. Most importantly, it signals a continued shift away from fossil fuels, both in asset allocation and popular sentiment.
Earlier this year, Norway's oil fund revealed that it had shed a number of coal investments over both economic and environmental concerns, in its first report on responsible investing. However, questions arose as to whether its resources had just been reshuffled into different fossil fuel stakes—an investigation from environmental groups showed that in some cases, its investment in coal may actually have increased since that announcement.
Now, however, the finance committee in Norway's parliament has issued a unanimous recommendation to the oil fund to institutionalize the divestments in coal. According to the AP, the directive is set to take effect starting next year. So, beginning in 2016, the coal industry is set to lose billions of dollars.
"If you'd told any of us, three years ago, that the planet's largest sovereign wealth fund would begin divesting, we would have laughed," Bill McKibben, a key figure in the divestment movement, said in a statement. "The way this idea—that the world has far more fossil fuel than it can burn—has spread is an enormously hopeful sign."
Coal is already dying—market forces, natural gas, environmental laws, and technological advancements in clean energy are already rendering the fossil fuel an unfavorable investment—but the global divestment movement is speeding the process. As observers like David Roberts have pointed out, campaigners have helped paint investment in coal as downright immoral; no less than the Pope is following suit.
Divestment is working. A campaign spearheaded by college students, grounded in campus protest, has snowballed into global force that's actually moving mountains of capital out of the planet-killing column in investors' ledgers. It's still probably not enough to seriously or immediately undermine the entire industry's current financial health, but it's getting there, and undoubtedly creating an unfavorable climate for future investment and tarring coal in the process. All of which helps level the playing field and encourage more investment in alternative energy, where the cost of solar panels and wind turbines are still falling, to the point that they're competitive with coal in many regions, and the industry is adding hundreds of thousands of jobs each year.
The chorus of divestors now extends beyond McKibben and environmentalists, to major, wealthy universities like Stanford, mega-philanthropists like Bill Gates, and, as of January, 2016, the single biggest wealth fund in the world.