Norwegian government fund puts Buffett’s Berkshire Hathaway Energy on watch

The Norwegian Government Pension Fund Global, the world’s largest sovereign wealth fund that runs more than a trillion dollars, is considering divesting Warren Buffett’s Berkshire Hathaway Energy for its coal exposure.

Today, Norges Bank, the asset manager for the fund, announced it will divest two companies due to their coal exposure and has placed two more under ‘observation’, including Berkshire Hathaway Energy, the $24.3bn firm 90% owned by investment guru Buffett’s Berkshire Hathaway.

The decision is part of recent Norwegian government rules stating that when 30% of a company’s activities or revenues derive from thermal coal, it may be excluded from the GPFG. The rules also state that emphasis should be given to the degree of renewable energy activity by the company.

However, even though Berkshire Hathaway Energy owns one of the largest renewable energy portfolios in the US including solar, wind, hydro and geothermal projects, its coal activities means the fund could divest. MidAmerican Energy, which has strong renewable operations, is also at risk of divestment for coal exposure.

The companies that will be blacklisted by the fund for their coal exposure are Tri-State Generation and Transmission Association and PacifiCorp, which is a subsidiary of Berkshire Hathaway Energy.The giant fund bases its decisions on recommendations from its Council on Ethics, which consists of legal experts that analyse its investment holdings on controversial issues. Boycott decisions by the fund are often used as a guide for exclusions companies by other institutional investors.

Other exclusions announced today are Brazilian meat processing company JBS SA for gross corruption. Federal prosecutors have reportedly charged its former chairman Joesley Batista and two former executives with government bribery.

Chinese fabric maker Luthai Textile has been excluded for human rights violations. Nien Hsing Textile Company is under observation for the same reason.

Norges bank also announced that chemical company United Phosphorus Ltd (UPL) is under ‘active ownership’. The Council of Ethics wrote in its recommendations that UPL had said it would reinforce measures to reduce child labour in its operations and advised it be placed under observation to await the results of its measures.