How Significant Is Norway’s Fossil Fuel Divestment Announcement?

Last week Norway’s Government Pension Fund Global (GPFG) announced that it would divest certain fossil fuel investments. Today I offer some context for this announcement.

Among those classified just as oil and gas exploration companies, there are 787 companies with a global value of $832 billion. The largest category by value is integrated oil and gas companies, which is dominated by the supermajors like ExxonMobil and Shell. Globally, there are 51 companies in that category with a value of $2.3 trillion.

Most of the U.S. oil and gas companies targeted for divestment sold off following the announcement. That impact was clearly psychological, but there may be a more significant impact for companies in which the fund holds a larger ownership share.

There are five oil and gas holdings in which the fund owns at least 3% of the company, but none of those companies are U.S. oil and gas companies. Among those targeted for divestment, the largest ownership share of a U.S. company is the fund’s 2.6% ownership share of Delek US Holdings.

But in the grand scheme, even such a significant divestment is a tiny drop in the bucket compared to the scope of the world’s oil and gas sector. If the world keeps buying fossil fuels, companies are going to make money selling them, and investors are going to make money owning them.

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