Fossil fuels: Norwegian panel told that engagement is less effective than divestment

The high-level panel looking at whether the giant Norwegian Government Pension Fund should divest fossil fuel companies has been told by the Church of Norway that engagement is less effective than simple divestment.

A government appointed expert panel – which is chaired by new Principles for Responsible Investment (PRI) Chairman Martin Skancke – heard evidence from a range of players at a meeting at the University of Oslo earlier this summer, with the submissions published last month.

The remit for the panel is to look at whether exclusion is a more effective strategy for addressing climate issues at the fund than the “exercise of ownership and exertion of influence”. Its recommendations are to be presented by the end of November.

“Our impression is that active ownership in order to push companies in a more pro-environment direction demands more resources than simply divestment,” the Church of Norway said in its submission – presented by senior advisor Per Ivar Våje. The church also challenged the panel to interpret its mandate “wider than simply evaluating different policy instruments”.Alongside the Church of Norway, the panel took submissions from Peabody Energy, the largest private-sector coal company in the world, Rainforest Foundation Norway, industry body the World Coal Association and WWF Norway amongst others.

Peabody’s 51-page presentation sought to present an investment thesis for what it terms ‘21st Century coal’.
It comes as a report from the US Energy Information Administration (EIA) cited by the Daily Telegraph showed that 127 of the world’s top oil and gas companies are taking on debt and selling assets at an “unprecedented” rate to cover a shortfall in cash – which the paper said calls into question the industry’s long-term viability.
Earlier this year, the government fund said it had halved its exposure to coal producers. A year ago, fellow Norwegian investor Storebrand excluded a total 13 coal and six oil sands companies from all investments following a sustainability analysis of the energy sector.
The church’s submission related how its investment fund has divested from Statoil over its tar-sands extraction in Canada. “Ethical responsibility from rich countries is needed in order to stay below the two-degrees scenario,” it added.