Dec 04, 2014 - 11:00am
The recommendations by an expert group to the Norwegian Government Pension Fund to intensify scrutiny and potentially exclude “worst climate offenders” overnight came on the heels of the German government's move towards closure of some coal fired power stations to address climate change, show that the heat is intensifying on fossil fuels assets around the world, The Climate Institute said.
“The heat on fossil fuels has intensified overnight, with pivotal announcements in Germany and Norway highlighting the risk of high carbon assets being stranded in a world of rising climate action,” said John Connor, CEO of The Climate Institute.
“Coming just hours after the German government's steps toward coal-station closure, and while the world works on the next global climate agreement in Lima, the Norwegian news is yet another sign of companies and countries taking climate and carbon risk more seriously.”
The $850 billion Norwegian Government Pension Fund commissioned a report by an expert independent panel on how it should address its investments in assets that contribute to climate change and are exposed to “stranded asset” risk. The recommendations released overnight are that the Fund should be an active investor with regard to climate change.
The panel, convened at the request of the Norwegian parliamentary majority, also recommended that the Fund’s guidelines exclude companies whose activities are harmful to the climate, on a case by case basis.
The Norwegian Government Pension Fund ranked 41st out of the world’s largest 1,000 asset owners on last year’s Asset Owners Disclosure Project (AODP) index, which measures funds disclosure and policies related to climate risk. The Fund ranked first among sovereign wealth funds. The AODP is a sister organisation to The Climate Institute.
“This is one of the world’s largest sovereign funds, a significant investor on the global scene, with long-term responsibilities towards Norwegian citizens. These recommendations say that climate risk should be considered and mean that the heat is being put on companies with substantial fossil fuel assets," said Connor.
Germany's move towards coal plant closures is part of a broader package of emission reduction measures to ensure the country meets its target of 40 per cent below 1990 levels by 2020. The German news builds on the announcement last week by Germany's biggest utility, E.ON, to split off its fossil fuel assets.
Connor said: "This is the beginning of the end of traditional coal-fired generation (without CCS) in Germany."
"Around the world, countries and companies with a reliance on traditional fossil fuels are increasingly at risk. The heat is on.”
For more information Kristina Stefanova, Communications Director, The Climate Institute, 02 8239 6299