Norway’s Finance Ministry has asked the government’s $1 trillion fund—the world’s biggest sovereign wealth fund—to recommend a schedule for phasing out its investments in pure exploration and production energy companies.
Its parliament approved earlier this month plans by the fund to divest from oil and gas exploration companies in a landmark decision that could impact future investor attitude toward fossil fuels, Oil Price reported.
In a letter sent to Norges Bank, the bank managing the fund, the finance ministry said, “Norges Bank is, therefore, requested to assess which subsectors will, based on FTSE Russell’s changes with effect from 1 July 2019, encompass exploration and production companies in the current subsector, as well as a time schedule for the phase-out of equity investments in exploration and production companies from the fund’s strategic benchmark index and investment universe.”
The bank has until Sept. 13, 2019, to respond with a recommended time schedule for divesting from E&P firms.
After months of deliberations, Norway’s government proposed in March that the Government Pension Fund Global, as the so-called oil fund is officially known, divest from 134 companies classified by the index provider FTSE Russell as belonging to the exploration and production subsector.
The move by the fund, which has amassed its vast wealth on the back of Norway’s oil and gas revenues, comes at a time when investors are increasingly pressing major oil companies to start taking climate change seriously and to prepare their business portfolios for a world of peak oil demand, whenever that may come.