Finances, Not Climate, Drive Norway’s Decision To Divest From Oil And Gas
Norway has decided to have its sovereign wealth fund divest from all upstream oil and gas holdings. The Norwegian Central Bank, which manages the $1 trillion fund, recommended this move back in November 2017, but the official decision was made on March 8, 2019.
The move comes at a time when oil and gas companies are increasingly under fire for their purported roles in perpetuating climate change. Norway's move to divest from certain oil and gas holdings, however, is not a reflection or a reaction to the environmental movement or to climate change issues.
Norway is a major oil and gas producer itself and most of the money in its sovereign wealth fund comes from the profits it derives from energy production. The decision is based on the fear that Norway's sovereign wealth fund is overexposed to risk from price volatility in oil and gas. According to Norwegian politicians, the massive drop in oil prices in 2016 and subsequent price swings suffered by the commodity revealed vulnerabilities and risks present in the sovereign wealth fund's investment mix and prompted the move.
*To read the full article in Forbes, click here.