Published on 19 May 2020

SUSTAINABLE FINANCE

The Norwegian sovereign wealth fund blacklists Glencore, Anglo american

The Norwegian sovereign wealth fund introduced new criteria-based exclusions to divest itself from coal. Strongly committed to the fight against global warming, the fund recently classified large coal mining companies on the same level as high-emitting utility and oil companies. For now, Glencore and Anglo American have been blacklisted, while BHP is temporarily excluded from the list.

Camion charbon glencore Australie Glencore
Glencore mining company is now excluded from the Norwegian sovereign wealth fund’s portfolio due to its significant exposure to coal.
@Glencore

On May 12th, Norway’s sovereign wealth fund, the largest in the world with more than $1 trillion in assets, added 12 new companies to its blacklist. The blacklist included mining giants Glencore and Anglo American, resulting in the fund’s divestment from these companies. The sovereign wealth fund owned 1.2% of Glencore’s capital and 2.4% for Anglo American. This is powerfully symbolic for a global financial player that has investments in more than 9,000 companies worldwide, effectively controlling 1.5% of the world's market capitalization.

Decisions made by funds often serve as benchmarks for other responsible investors. The new exclusions follow measures adopted by the Norwegian parliament in 2019 that require an end to investment in companies generating more than 20 million tonnes of coal per year, or those using more than 10,000 MW of coal in power production. The former exclusion criteria were more flexible, concerning companies with more than 30% of their turnover from coal.

Mining, oil and utility company exclusions

Previous criteria protected large companies with diversified activities, such as mining and utility companies. Henceforth, the Norwegian sovereign wealth fund will classify mining on the same level as coal-fired utility producers and certain oil companies. Utility giant RWE, Europe’s largest CO2 emitter, was also added to the blacklist under these new thresholds. Last year, the fund also excluded 134 oil companies (except for the majors); a paradox considering Norway is Europe’s leading oil producer.

For now, the only mining company safe from exclusion is BHP Billiton, an Australian mining giant. While it produces well over 20 million tonnes of thermal coal per year, the Bank of Norway announced that the company will only be put under observation. Unlike its counterparts, the Melbourne-based company is temporarily spared since it reported heavy investment towards lowering its emissions. Most importantly, BHP Billiton hopes to sell its coal asset shares. The sovereign wealth fund owns 5% of the Australian company, thus, it is monitoring the evolution of this strategy before making a final decision.

The Norwegian sovereign wealth fund has also excluded an additional seven companies on ethical grounds, directly concerning Canadian Natural Resources, Cenovus Energy, Suncor Energy and Imperial Oil due to their "unacceptable greenhouse gas emissions". The Brazilian mining company Vale and the Egyptian utility company ElSewedy Electric were excluded due to "serious damage to the environment", while the Brazilian power producer Eletrobras was excluded for human rights violations in Belo Monte.

Ludovic Dupin


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