Norway’s $1 Trillion Fund Defended After ‘Propaganda’ Attack

(Bloomberg) -- The world’s biggest sovereign wealth fund was recently accused by a number of high-profile economists of having misled people in an effort to persuade skeptics it should be allowed to exit oil and gas stocks.

The attack -- one prominent critic referred to parts of a presentation made by the fund’s chief executive officer, Yngve Slyngstad, as “propaganda” -- has added friction to one of the most momentous proposals the $1 trillion investor has ever put forward. About $40 billion in shares of companies including ExxonMobil Corp. and Royal Dutch Shell Plc are at stake, with their potential divestment marking a watershed moment for the entire fossil fuel industry.

Now, lawmakers on Norway’s parliament finance committee say they don’t understand the economists’ criticism of Slyngstad. They, together with the rest of parliament, will decide in the spring what the fund will do with its oil and gas stocks.

“I don’t think he should be criticized for presenting data like these to the committee,” said Helge Andre Njastad of the Progress Party, which is the junior member of Norway’s minority government.

Extra Returns

Opposition lawmakers agreed. The Socialist Left Party’s Kari Elisabeth Kaski said Slyngstad’s figures were “completely unproblematic.” Bjornar Moxnes, who runs the Red Party, said the fund’s analysis was “useful and relevant.”

“I don’t believe the finance committee feels misled by what we were presented, like the critics claim,” he said. “Regardless of the issue of returns and risk for the fund from owning oil and gas stocks, we believe the fund should divest, out of climate considerations.”

The controversy started after Slyngstad last month told lawmakers his fund would have made billions of dollars in additional returns if it had dumped oil and gas stocks earlier. That rubbed a lot of people the wrong way.

The economists countered that the hypothetical divestment in the fund’s analysis was set at dates where the oil price was historically high, making the return figures misleadingly attractive.