Black gold goes green
This week, Norway’s sovereign wealth fund announced that it would require the companies it invests in to reach net-zero emissions by 2050.
As a country with just 0.06% of the world’s population this might not sound like a big carbon coup, but it is. At the latest count Norway’s sovereign wealth fund — by far the biggest in the world — had net assets of around $1.2 trillion. That’s a national piggy bank worth approximately $220k (USD) for every single man, woman and child in the country.
Built on taxes and revenue from Norway’s substantial oil and gas industry, the fund has ballooned into a behemoth of the investing world since the first transfer was made by the country's government in 1996. Those substantial deposits got the fund started, but now more than half of the fund's net value comes from the return on its investments, rather than deposits into the fund.
Visualized above are the ~5,400 of the fund's equity investments that at the end of last year had a market value of more than $10m. The fund is estimated to own around 1.3% of the global stock market, with investments in broad swathes of the market across big tech, big oil, big banks and big everything — and that's not even mentioning the other ~30% of the portfolio that's in fixed income and real estate.
The irony that a fund built on oil and gas revenue is now pushing for net-zero is hard to ignore. However, as one of the world's largest investing entities, the Norwegian sovereign fund can exert genuine pressure on major companies to clean up their act — or see their shares dumped.
