By Mikael Holter
Antonio Guterres’s tweet celebrated a spate of changes decided this month for Norway’s fund, including a limited divestment of oil and gas stocks. It’s part of a chorus of reactions — from environmental activists to foreign governments — that has disregarded Norway’s official line that the decision to sell is purely about spreading the petroleum-producing country’s financial risk.
It might seem odd that Norway would pass up the glory at a time when other investors outbid each other with tokens of sustainability. In reality, the Nordic country is navigating a minefield of conflicting interests.
Even as it paints itself as a world leader in the electrification of transportation, the fight against deforestation and the movement to divest coal, Norway is doing what it can to extend the 50-year run as a petroleum producer that made it one of richest nations on Earth. Taken as a climate measure, the fund’s divestment could expose Norway to accusations of hypocrisy and erode the trust of oil companies, which is already being tried in other ways.
“If an impression is created that this is a climate-policy measure, it would seem a bit strange for us to divest from others that are producing fossil fuels, while we keep doing it ourselves,” said Ragnar Torvik, a economics professor at the Norwegian University of Science and Technology in Trondheim.
An illustration came this week when the chief executive officer of Lundin Petroleum AB, a Swedish explorer that’s played a key role in Norway’s oil industry in the past decade, lashed out in the Financial Times at the country’s government, calling its decision “crazy.” As a pure explorer and producer, Lundin will be divested, as opposed to large integrated companies such as Exxon Mobil Corp.
Many Norwegian politicians and bureaucrats are also concerned that the world’s biggest wealth fund is increasingly being viewed as activist.
“The fund isn’t a political instrument,” the Finance Ministry said in an emailed statement. “When it comes to the decision to remove upstream companies from the fund, it has been clearly communicated that the measure is about reducing risk, and isn’t justified by climate policy.”
And yet, the power to define the divestment seems to be escaping its makers.
The Finance Ministry, which oversees the fund, has even been challenged from within the Conservative-led and mostly pro-oil government. Climate Minister Ola Elvestuen, who represents the more environment-friendly Liberal Party, called the divestment the “most important climate decision” the coalition has agreed on.
The seeds were planted when the fund itself proposed dumping all its oil stocks in 2017, according to Thina Saltvedt, a former oil analyst who’s now chief analyst for sustainable finance at Nordea Bank Abp in Oslo. Back then, the fund said it wanted to make Norway “less vulnerable to a permanent drop in oil and gas prices” even as it stressed that the proposal didn’t imply a particular market outlook.
“There’s a reason you believe the oil price can collapse and stay low,” Saltvedt said. “And that’s also because of climate change.”
It can be argued that the divestment is both risk spreading and climate-motivated, said Sony Kapoor, who heads think tank Re-Define.
“This would not, and could not, have happened were there not a reasonably significant minority in Norway recognizing that the excessive dependence on oil, in the context of climate change and changing energy dynamics, is potentially risky,” Kapoor said. “If this move produces knock-on effects, it may be an important signal.”
In an interview this week, Prime Minister Erna Solberg repeated the government’s official line. But even she acknowledged the issue isn’t one-sided.
“It also has a side effect through the fact that it limits our oil fund’s investment in oil production abroad,” she said. “So you can always say that it contributes to lowering investments in that industry a bit.”