Here’s What Lawmakers Want to Do With Norway’s $1 Trillion Fund

(Bloomberg) --

Key lawmakers gave a nod to a range of changes for Norway’s $1 trillion sovereign wealth fund -- from divesting some of its oil stocks, to an overhaul of its fixed-income holdings and tighter restrictions on coal investments.

But even after one of the most eventful years in the fund’s history, more change could be coming, documents from parliament’s Finance Committee revealed.

As the committee as expected late on Tuesday approved the government’s plans ahead of a vote in parliament, opposition politicians made a series of proposals and comments that show what the world’s biggest wealth fund may have in store in the years ahead, maybe even as soon as after the 2021 election.

Here’s an overview:

Government Bonds and Ethics

The fund has a comprehensive set of ethical guidelines, from a ban on tobacco to climate and human rights criteria. The Conservative-led government has already set up an expert panel to review them.

But now almost the entire opposition in the committee, led by the Labor Party, parliament’s biggest group, said Norway should consider a separate set of ethical rules for government bonds. Criteria would include transparency and responsible budget practices in the issuer countries.

The opposition also said that screening new markets or industries for ethical or climate risks ahead of investments could be a good strategy, and asked the government to study that possibility. They asked the government to review the strategy for investments in conflict areas, including occupied areas such as the Palestinian territories.

Oil Stocks

After more than a year of deliberations, the government opted for a watered-down version of the fund’s own proposal to dump all oil and gas stocks to reduce Norway’s overall exposure to the risk of lower commodity prices. The plan is for the fund to sell pure oil explorers and producer, but keep the big integrated companies, most of which are increasing investments in renewable energy.

Opposition politicians led by the Socialist Left Party want the fund to actively engage with the integrated companies to make sure they boost their exposure to renewables. Although Labor didn’t back that proposal, it had supported the fund’s wish for a full divestment and has said earlier it couldn’t exclude future changes.

Green Infrastructure

A smaller minority, excluding the Labor Party, demanded that the fund’s so-called environmental mandate be expanded beyond the current 120 billion kroner ceiling and be evaluated each year.

The parties demanding this are key support parties for Labor and could force the issue in a any potential future government talks.

Coal

The same small minority also demanded that rules on coal investments be even stricter and exclude any companies planning new coal-fired plants. They also asked the government to next year come back with a plan for a final divestment of all coal-related investments.

Gambling

Labor also went alone again in proposing that gambling companies be excluded. If it comes back into power, it could very well force this through.

To contact the reporter on this story: Mikael Holter in Oslo at mholter2@bloomberg.net

To contact the editors responsible for this story: Jonas Bergman at jbergman@bloomberg.net;James Herron at jherron9@bloomberg.net

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