Norway’s sovereign wealth fund keeps faith with oil, but with modest renewables investments

 

Norwegian oil fund Chief Executive Yngve Slyngstad
Norwegian oil fund Chief Executive Yngve Slyngstad

Norway’s giant sovereign oil wealth fund has announced that it will continue to invest in major oil and gas operators with its massive $880 billion fund – but that it will also make modest   investments in renewables.

The fund’s largest equity holdings are all companies based in Europe, including Nestlé, Novartis, HSBC Holdings, the Vodafone Group and Royal Dutch Shell.

The fund, the world’s largest sovereign wealth fund, also said it would roughly double its environmentally related investments to 50 billion kroner, or about $8 billion.

The fund says it will be looking for investments in companies active in renewable energy, energy efficiency, pollution control, and water and waste management, as well as in bonds sold to finance such efforts.

So far, the fund has struggled to achieve competitive results on green investments, which earned an overall return of 12% from 2010 through 2013, compared with 54% for the stock market, according to a recent report by Norway’s finance ministry.

Detailing its investment strategy for the next two years to 2016, the fund said it expected to hold stakes of 5% or more in 100 companies by 2016, compared with 45 companies last year. It cannot buy more than 10% of any company under its mandate from the Norwegian government.

The fund said it planned to invest 1% of its overall portfolio, which would be about $9 billion, in the private real estate market in each of the next three years. It moved into real estate in 2011 by investing in London’s Regent Street commercial area with the Crown Estate, the British government marine property management organisation.

The fund was set up in 1990 to invest a portion of the government’s oil revenue in markets outside Norway to save for future generations and prevent current oil earnings from overheating the Norwegian economy.

* The UK is one of only two oil-producing countries around the world which has not set up a similar national oil wealth fund.

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