(Corrects paragraph 10 to show fund ‘had expected it could’ .. not .. ‘was planning to’ .. issue 20 pre-AGM statements in 2017)
By Gwladys Fouche
OSLO, Oct 27 (Reuters) - Norway’s $1 trillion sovereign wealth fund expects more banks to address how their lending contributes to greenhouse gas emissions after BNP Paribas’ decision to stop funding shale energy projects, the fund’s CEO said on Friday.
France’s biggest listed bank said on Oct. 11 it would no longer work with oil and natural gas companies that primarily do business in shale or oil sands because it plans to increase support for renewable energy projects.
Yngve Slyngstad, CEO of the world’s largest wealth fund, told Reuters in June that it would be asking banks it invests in about the carbon footprint of their corporate loan books.
Citing BNP Paribas’ move, Slyngstad said: “I think this is a change that you may see in several banks as bank managements and bank boards ... ask the question about how they look at their lending and the implicit carbon footprint of the activities they are lending to.”
In the past the fund has quantified the carbon footprint of its equities and bond holding and is now turning to its carbon exposure to lending.
The financial industry is the biggest single sector in the fund, accounting for 24.2 percent of its equity portfolio, including BNP Paris with a 1.96 percent stake worth $1.6 billion according to the fund’s website.
Other bank holdings include Credit Suisse, Deutsche Bank, HSBC, Citigroup, Wells Fargo, Barclays and Nordea.
Norway’s fund is becoming a more active shareholder and this year started stating its public position on issues such as executive pay and threatening to use its voting power if its preferences were ignored.
However during the 2017 annual general meeting season, the fund only issued one public statement ahead of a company shareholder meeting - for the planned merger of German industrial gases group Linde and U.S. peer Praxair in September, which it backed.
“It has been more effective than we thought,” Slyngstad told reporters, adding that the fund had initially expected it could issue around 20 pre-AGM statements this year.
“To the extent that where we have decided ‘this is something that we are going to go public on’, we have had a different type of dialogue with some companies” that meant the fund did not need to go public, he said.
Earlier on Friday, the fund reported returns of 3.2 percent in the third quarter. (Editing by Mark Heinrich)