The world's largest pension fund, the $1.1 trillion Norwegian Government Pension Fund Global, has been instructed by the Norwegian parliament to divest from coal-related holdings.
The Institute for Energy Economics and Financial Analysis (IEEFA) welcomed the Norwegian government's decision to divest from coal, arguing it would spark similar divestment by other large pension funds.
IEEFA director of finance Tom Sanzillo said: “This is a financially defensive and prudent course of action to protect the fund from further losses from its coal-mining and coal-burning power generation investments.”
“No investment fund in the world – be it university, pension or institutional – can make a compelling financial case to hold these equities in their portfolio any longer,” Mr Sanzillo said.
The Norwegian move follows an IEEFA report, authored by Mr Sanzillo, which illustrates the depreciating value of coal-related stocks.
“The coal industry has failed to compete with other energy resources, particularly wind, solar and energy efficiency,” according to Mr Sanzillo.
“Its various export and trading schemes have only resulted in further deterioration of share value.
“Coal stocks are losing money every day,” he said.
GPFG will divest US$11.4 billion that is currently invested in coal sector holdings.
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