The fund, which owns on average a 1.3 per cent stake in every listed company in the world, is coming under pressure to wield its enormous influence to lobby companies to take environmental and social concerns more seriously.
“Environmental, social and governance issues are integrated into the investment process. This can lead to adjustments to the portfolio and decisions to divest from specific securities,” the fund's managers explained in a press release on Thursday. “Based on these assessments, we chose to divest from 49 companies in 2014 where we considered there to be high levels of uncertainty about the sustainability of their business model.”
Yngve Slyngstad, chief executive of Norges Bank Investment Management, which manages the fund on behalf of the Norwegian government, stressed that the report was only a first step.
“We recognise that there is still much to be done, and that we will encounter a number of challenges in the years ahead,” he said in the statement. “Our role is to think long-term and protect value for future generations.”
Of the 49 companies the fund sold in 2014, 22 were divested due to their high greenhouse gas emissions, 19 because of water management issues, mostly related to coal-mining, five because of deforestation risks, again due to mining, and three for other, unnamed reasons. As many as 38 were in the mining sector, two were in cement production, one generated power from coal, and five were involved in oil production.
The report said that the fund had begun to put pressure on companies to improve their reporting on child labour, climate change and water management, starting by sending letters out to 60 companies in 2012.
In 2014, it reported, it asked two gold mining companies, Torex Gold Resources and Argonaught Gold, and Kyushu Electric Power, a power supply company, to improve their reporting on water management. It encouraged four oil companies — Rosneft, Oil India, Whiting Petroleum and Holly Frontier — to improve their reporting on climate change. And it asked two textile companies, Far Eastern New Century and Sports Direct International, and one food company, Viscofan, to improve their reporting on child labour.