Storebrand ditches fossil fuel assets in pursuit of ‘long term, stable returns’
8 July 2013, Business Green
Major victory for global divestment campaign as Nordic investment giant excludes 19 fossil fuel companies from its portfolio
The global campaign to encourage institutional investors to divest from fossil fuel assets secured a major victory last week as Norwegian pensions and insurance giant Storebrand announced it has excluded a further 19 fossil fuel companies from its investment portfolio.
The company, which is one of the largest financial services companies in the Nordics, issued a statement confirming that will no longer hold investments in 13 coal and six oil sands companies.
The move means Storebrand has now excluded 177 companies and 32 countries from its investment portfolio for failing to meet its minimum sustainability standards.
Christine Tørklep Meisingset, head of sustainable investments at the company, said that the aim of the exclusions was to “reduce Storebrand’s exposure to fossil fuels and to secure long term, stable returns for our clients”.
“If global ambitions to limit global warming to less than 2 degrees Celsius become a reality, many fossil fuel resources will become unburnable and their financial value will be dramatically reduced,” she said in a statement. “Exposure to fossil fuels is one of the main sustainability challenges facing business, so for us it is a logical and necessary step to adjust our investments accordingly.”
Significantly, Storebrand does not operate specific “ethical funds” and as a result the exclusions cover all of its funds and investment vehicles. “This offers an unprecedented level of security for our clients,” the company said. “No matter which fund or portfolio their assets are invested in, the same high standards apply.”
The rationale for excluding the carbon intensive firms from its portfolios is a near exact replica of the argument put forward by the Carbon Tracker initiative and 350.org’s campaign to encourage investors to divest from fossil fuels.
Jeremy Leggett, chairman of the Carbon Tracker group, which has produced a series of reports over the past year highlighting the risk presented by the so-called “Carbon Bubble”, said that Storebrand’s commitment could form part of a significant new investment trend.
“There are grounds to be more than cautiously optimistic that something exciting is happening,” he told BusinessGreen. “We think there will be more investors looking at this argument and coming to the same conclusion.”
His comments were echoed by Carbon Tracker’s James Leaton, who noted that Storebrand’s statement made it clear that it was excluding certain assets because they predict some fossil fuel assets could become “unburnable”.
“The logic is starting to flow through that if you are a pure coal company without another business model or a tar sands company then you are exposed to significant climate-related risks,” he said.
Storebrand’s decision follows similar commitments from a number of universities and public sector pension funds in the US, which have responded to 350.org’s campaign calling for divestment from fossil fuel assets.
It also came as Dutch bank Rabobank reportedly committed to not investing in shale gas projects.
In addition, reports emerged today that the EU’s climate change commissioner, Connie Hedegaard, has stepped up calls for development banks to rule out carbon intensive investments.
The Euractiv website this morning reported on a new report on bank lending policies in the Western Balkans, in which Hedegaard argued that tougher sustainability standards should be imposed on the lending rules followed by development banks.
“I am particularly keen to see three international financial institutions – the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD) and the World Bank – join with their EU and OECD partners to take a lead role in eliminating public support for fossil fuels,” she said in the foreword to the report, published last month.
The moves were welcomed by Phil Aroneanu, US managing director of 350.org, who hailed Storebrand and Rabobank’s commitments as a significant breakthrough for the divestment campaign.
“In the past year we have seen the financial sector begin to wake up to the reality that investments in fossil fuel companies represent a bad bet,” he said in a statement. “Some of the action can be attributed to citizen-led campaigns, and some of it can be attributed to a simple reading by financial analysts of what scientists have been telling the world about how much carbon can be burned without cooking the planet.”
He added that over 400 university campuses and dozens of cities and states now have campaigns under way to promote divestment policies and revealed that the movement will get a further boost this autumn when 350.org’s Fossil Free campaign expands into Europe and other territories.
“This appears to be the time when the moral case for action is joining with the sober thinking that in terms of dollars and cents it’s good business to pull money out from the fossil fuel industry,” he said. “With the effects of climate change being felt by communities across the world, action can’t come fast enough. A bet on fossil fuels is a bet against a sustainable future.”
