* Storebrand says returns should ultimately be higher
* Returns already at least match conventional investment
* Says Norwegian government overly exposed to fossil fuels
* New Dutch report says insurers also overly exposed
By Barbara Lewis and Carolyn Cohn
LONDON, April 27 Storebrand, Norway's largest
private pension fund, on Thursday launched two new fossil-free
funds and called on the government to cut the nation's exposure
to coal and other fossil fuels.
Norway's $900-billion sovereign wealth fund, the world's
largest and built on oil and gas revenues, has sought to lead
the shift from investment in coal, the most polluting fossil
fuel, but it remains heavily exposed to oil and gas.
It has also said it earned less money because of divestments
over the past decade made for ethical and environmental reasons.
Storebrand CEO Odd Arild Grefstad said getting out of fossil
fuel would deliver the highest returns over the longer term, and
Norway needed to diversify out of oil and gas as asset values
there could suffer if more investors turn their back on them.
"We urge the Norwegian government also to show leadership by
opening up for more sustainable investments," Grefstad said in
an emailed statement. "This means fewer investments in the
fossil fuel industry, and more in renewables."
Storebrand, Norway's largest private investor with a 34
percent share of its pension market, said the two new broad
funds were invested in a range of sustainable stocks.
They could, however, have a small exposure to fossil fuel of
less than 5 percent through, for instance, companies that use
derivatives of oil as an component.
The returns they deliver will be at least as good as for
conventional index-linked funds, it said, and are ultimately
One global fund has a value of 2 billion Norwegian crowns
($234 million) and the other Norwegian fund is worth 750 million
They will join a family of fossil-free funds managed by
Storebrand with total assets of 1.1 billion euros ($1.2 billion)
compared with its overall 53 billion euros of assets under
management, Storebrand told Reuters.
It said Norway could sell fossil fuel assets and also review
its strict investment rules to allow buying into more renewable
sources, such as wind and solar.
While mining and oil companies say the world still needs
fossil fuel, especially in emerging economies and transport,
environmentalists say green energy is becoming cheaper and
anticipate breakthroughs in electric vehicles and storage.
Among the sectors with a particular interest in changing
financial habits is insurance, which faces having to pay for the
damage caused by extreme weather.
A report this month from Dutch consultancy Profundo on the
exposure of the insurance industry to all kinds of fossil fuels
found the 15 largest European insurance companies invest more
than $130 billion in fossil fuel companies.
Eleven of these insurers also continue to underwrite fossil
fuel projects. They include Germany's Allianz and AXA
of France, which the report found were most exposed to
fossil fuels, with fossil fuel investments of $59 billion and
$34 billion respectively. It added the estimates were
But AXA Investment Managers, which manages money for the
French insurer and for external clients, on Tuesday announced it
was planning to pull out of companies that derive more than half
their revenue from coal-related activities.
This follows AXA’s announcement in 2015 that it would remove
around 500 million euros of coal investments from its insurance
($1 = 0.9144 euros)
($1 = 8.5549 Norwegian crowns)
(Additional reporting by Gwladys Fouche and Alister Doyle in
Oslo; Editing by Mark Potter)