11 ms·

Norway's $860B Fund Drops 52 Companies Linked to Coal

229 points by bootload 11y ago

mc32 11y ago
Why not? This is both good long term for the environment and good long term for their investments' potential growth. As Coal gets less favored status more coal companies will feel pressure on their stocks. Sort term they may lose out on some growth markets like India and China, but even those markets will surely shift toward renewables in years to come leaving coal and companies tied to it depressed.
- laichzeit0 11y ago
  What exactly do you mean by "feel pressures" on their stock? Once a share has been sold the company has already received all the money it will ever receive from that share. Whether it goes up or down from that point is irrelevant to the company. For whoever bought that share it might be a problem if he wishes to sell it again. Most of the investors buy IPO shares for dividends, so as long as the company makes money and pays dividends they also don't care about the share price.
  - WalterBright 11y ago
    > as long as the company makes money and pays dividends they also don't care about the share price. Oh, they care very much. For one thing, a tanking share price means the dividend will surely be cut. A rising share price means the dividend will likely increase.
    - tinkerrr 11y ago
      Dividends are paid from company earnings (profits), not stock, and as such, stock price doesn't affect the ability of the firm to pay dividends. They could both have the same underlying cause though - which is, a deteriorating business condition that reduces earnings. Otherwise, e.g. if Coke's stock price falls by 50% in a recession, doesn't mean it will cut its dividend.
      - WalterBright 11y ago
        Stock prices come from the same forces that shape dividends. There's a reason that dividends from diverse companies all tend to cluster around the same percentage of the share price.
  - keymone 11y ago
    Bonuses are often paid in stock units or options, so there is that pressure.
  - thinkcontext 11y ago
    True but a weaker share price means it will be more expensive to access capital or bond markets or to get a loan. Coal is a very capital intensive industry so this is significant.
NamTaf 11y ago
It's a good move, that nevertheless retains a healthy dose of irony given the fund was developed almost entirely on the back of petroleum.
- T2_t2 11y ago
  I was going to say the exact same thing! "Our environmental destruction is fine. But yours? That is just too much!"
diffraction 11y ago
coal is in the process of consolidation/deleveraging/bankruptcy and they would be making this decision anyways. congrats on extracting social justice points from your business decision.
- barney54 11y ago
  Along with a heaping dose of hypocrisy. If the co2 from coal is bad, then the same is true for the coal from oil and natural gas.
  - awakeasleep 11y ago
    Hey, I know this is silly because the fund isn't event taking these actions explicitly for environmental reasons, BUT if they were, your comment would be a great example of an Internet debate fallacy that I try and fight. If an entity is doing something 'bad', reducing the scope or amount of that behavior is neither hypocritical nor pointless. It doesn't matter if it's a big company that pollutes, or an individual trying to reduce a bad habit. Movement in the right direction is an essential part of things getting better.
    - msandford 11y ago
      According to that standard then if you got rich selling illegal drugs so long as you then start doing "good" things with your illicit gains after that, nobody can criticize you? Sure, I guess...
      - kirrent 11y ago
        Of course they can criticize you for selling illegal drugs in the same way you can criticize Norway for getting rich off oil. He's saying that praising that person for doing something like giving money to charity or anti-drug efforts isn't completely inconsistent. I disagree that it can't be hypocritical. If Norway was doing this for environmental reasons I think it'd be quite hypocritical. That doesn't mean it's not a good thing to do though.
    - 11y ago
1945 11y ago
It's likely not out of the goodness of their heart but rather coal's terrible performance. There is a bankruptcy filing every other week. This week alone the largest miner, Peabody, filed for bankruptcy.
- peteretep 11y ago
  Wouldn't that information already be priced in to the market?
  - 1945 11y ago
    Absolutely, but it by no means marks the bottom. Have a look at the last 5 years of KOL (ETF because I can't recall the coal futures symbol).
    - peteretep 11y ago
      > but it by no means marks the bottom If you know with any degree of certainty at all which way an asset will move, you stand to make a gigantic amount of money. Everybody you have ever heard telling you which way an asset is moving is guessing just as much as people who tell you it's going to move the other way.
      - winfred 11y ago
        It isn't as much the fact that the asset will move, as the direction and the timeline that matters, as well as the availability of investment vehicles. If I'd wanted to profit on the knowledge that coal will go down, I'd have to short the stock which isn't free, so it is important for me to know on what time frame it will go down (if I knew it would go up, but not on what time frame, it would work just fine). Another example, I know lithium (the commodity) is going to go up, but 90% of the lithium market is dominated by 3 companies, each of which get less than 20% of their revenue from lithium mining, meaning I have no way of profiting from my knowledge.
        11y ago
outside1234 11y ago
Alternative Title: "Fund built from selling petroleum gets holier than thou with selling coal"
- arrrg 11y ago
  The fund … doesn’t? They just seem to be following new regulations, regulations that, apparently, aren’t even uncontroversial. The fund is not the Norwegian government, the Norwegian government is not the Norwegian parliament. This article doesn’t even say anything about what the fund thinks about this. It’s just matter of fact reporting on regulation changes and consequences. (All we know is that a majority in the parliament is in favor – and that’s why this law exists – and the minority government was “reluctant” concerning this law.) The article doesn’t even explicitly say anything at all about motives.
- pm90 11y ago
  Arguably, all of modern capitalism was built on the back of some very dirty and polluting technology. Would you say, then, that the capital of all the developed world is tainted?
  - jacobolus 11y ago
    Not to mention significant amounts of slave labor, child labor, war profiteering, fraud, outright theft, etc. In other words, by similar logic it could be called “holier-than-thou” for westerners to have any standards whatsoever about investment choices, because our wealth is built on all kinds of unsavory sources.
    - caminante 11y ago
      "by similar logic..." Please...do other countries currently have 22% of GDP tied to [slave labor, child labor, war profiteering, fraud, outright theft, etc.]? [1] http://ec.europa.eu/trade/policy/countries-and-regions/countries/norway/ http://ec.europa.eu/trade/policy/countries-and-regions/count... edit: In other words, by similar logic it could be called “holier-than-thou” for westerners to have any standards whatsoever about investment choices, because our wealth is built on all kinds of unsavory sources. I also find it ironic that "westerner" in your world doesn't seem to include Norwegians ;-).
frogpelt 11y ago
This is more a press release than reportable news. The companies were sold last year.
- Animats 11y ago
  Well, it's good that they sold last year, because Peabody Coal went bust last week.
sneezeplease 11y ago
Good move by Norway!! Can you read this? I cant tell if I am shadow banned? Please give me a vote in any direction
- rory096 11y ago
  >I cant tell if I am shadow banned? Yes, you are. Seems to have happened after this comment: https://news.ycombinator.com/item?id=10291099 https://news.ycombinator.com/item?id=10291099
  - jakub_h 11y ago
    Did I miss something or was HN bought out by Reddit, of all things?
- dang 11y ago
  We banned your account early on because you appeared to create it to post trollish comments here. If that's wrong, you're welcome to email us at hn@ycombinator.com. We're happy to unban people when there's reason to believe they will only post civil, substantive comments in the future.
baccredited 11y ago
The comments here are very negative so I'll share a little background on this Norway fund in case you haven't heard of it. Norway started making money from oil reserves and knew they wouldn't last forever. So they invested all the profits in a fund that bought stocks. Now the value of the fund, if liquidated, would net over $1 million per Norwegian citizen. read more: http://www.bbc.com/news/business-28882312 http://www.bbc.com/news/business-28882312
- borge 11y ago
  The math seems to be a bit off $860B / 5000000 people (2013, wikipedia) = $172000
  - stanmancan 11y ago
    "The fund, worth about $800bn (£483bn), owns 1% of the entire world's stocks, and is big enough to make every citizen a millionaire in the country's currency, the kroner." $860B USD = 7T KR / 5M people = 1.4M KR each
    - vinay427 11y ago
      I'm not sure why you responded to the parent, instead of the grandparent, which first asserted "$1 million" implying dollars.
      - stanmancan 11y ago
        Because the parent was the one I was clarifying for.
  - simonebrunozzi 11y ago
    I suggest you use "," when writing long numbers -> 5,000,000 This way it's easier to read for the rest of us.
    - borge 11y ago
jaibot 11y ago
"Investors other than Norway invest $860B in coal; money remains fungible and markets remain pretty efficient"
- woah 11y ago
  Midbrow dismissal
  - jaibot 11y ago
    I mean, yes, but I'll change my mind if I notice all the higher brows disagreeing.
- PascalsMugger 11y ago
  Well whoever acquired Norway's stake in the oil industry probably lost out since making that investment last year, so that fungible money now is gone.
electic 11y ago
The bigger question about Norway's $860BB fund is the price of oil. Right now oil is trading at $39.75[1] a barrel. Now that the Doha deal fell through earlier today, it is highly likely that oil will further fall over the coming weeks. Norway, and other sovereign funds, are now liquidating assets to make up for the shortfall in revenue.[2] We're talking about $5.7T in assets across these oil derived sovereign funds. That's a lot of selling folks. [1] http://www.investing.com/commodities/crude-oil-streaming-chart http://www.investing.com/commodities/crude-oil-streaming-cha... [2] http://www.institutionalinvestor.com/article/3533485/investors-sovereign-wealth-funds/oil-has-sovereign-wealth-funds-hitting-sell-button.html http://www.institutionalinvestor.com/article/3533485/investo...
- NegatioN 11y ago
  The withdrawal from coal is a year old decision[1] made my our parliament, which is as far as I see not based on plugging the holes in any way. We have a policy that states you can use up to, but not more than the expected surplus of the fund for the coming year. [2] So, I agree we're spending more than we used to do, but this is exactly the reason the fund was made in the first place. As long as politicians are curbed, and we stay within this rule, I'm not scared no matter how many billions are used from the fund. EDIT: and the core of my comment should have been, that I'm not sure this could be seen in the same context as other national funds, as we're "too big to fail"^tm [1] :http://e24.no/boers-og-finans/oljefondet-ut-av-kull/23459941 http://e24.no/boers-og-finans/oljefondet-ut-av-kull/23459941 [2] :https://snl.no/Handlingsregelen https://snl.no/Handlingsregelen
  - kagamine 11y ago
    More scared about the number of people in the oil business competing for jobs as the number of redundancies increases. As a n expat Brit in Norway I'm already at a disadvantage when applying for work.
known 11y ago
GDP assigns no value to work that’s not done for a paycheck, and extracts no penalty for destruction of natural resources http://qz.com/663110/happiness-is-the-new-gdp/ http://qz.com/663110/happiness-is-the-new-gdp/
cavisne 11y ago
No problems with oil though! https://en.wikipedia.org/wiki/File:Norwar_Exports_Tree_Map_(2009).pdf https://en.wikipedia.org/wiki/File:Norwar_Exports_Tree_Map_(... We will see this fund drain to zero over the next few years easily, Norway is a completely broken economy with high unemployment masked by "scholarships".
- imtringued 11y ago
  >No problems with oil though! Electric cars are still not widespread yet and oil will always be used in planes, trucks or ships for long distance transport.
  - notahacker 11y ago
    For that matter I'm pretty sure the growth of the petroleum driven automobile industry in Asia and Africa is going to vastly outstrip its gradual (and later perhaps even mandatory) replacement with electric vehicles in the West...
lazyjones 11y ago
The list of dropped companies is here, if anyone cares: http://www.nbim.no/en/transparency/news-list/2016/first-coal-exclusions-from-the-government-pension-fund-global/ http://www.nbim.no/en/transparency/news-list/2016/first-coal...

229 points by bootload 11y ago

mc32 11y ago

Why not? This is both good long term for the environment and good long term for their investments' potential growth. As Coal gets less favored status more coal companies will feel pressure on their stocks. Sort term they may lose out on some growth markets like India and China, but even those markets will surely shift toward renewables in years to come leaving coal and companies tied to it depressed.

laichzeit0 11y ago
What exactly do you mean by "feel pressures" on their stock? Once a share has been sold the company has already received all the money it will ever receive from that share. Whether it goes up or down from that point is irrelevant to the company. For whoever bought that share it might be a problem if he wishes to sell it again. Most of the investors buy IPO shares for dividends, so as long as the company makes money and pays dividends they also don't care about the share price.
- WalterBright 11y ago
  > as long as the company makes money and pays dividends they also don't care about the share price. Oh, they care very much. For one thing, a tanking share price means the dividend will surely be cut. A rising share price means the dividend will likely increase.
  - tinkerrr 11y ago
    Dividends are paid from company earnings (profits), not stock, and as such, stock price doesn't affect the ability of the firm to pay dividends. They could both have the same underlying cause though - which is, a deteriorating business condition that reduces earnings. Otherwise, e.g. if Coke's stock price falls by 50% in a recession, doesn't mean it will cut its dividend.
    - WalterBright 11y ago
      Stock prices come from the same forces that shape dividends. There's a reason that dividends from diverse companies all tend to cluster around the same percentage of the share price.
- keymone 11y ago
  Bonuses are often paid in stock units or options, so there is that pressure.
- thinkcontext 11y ago
  True but a weaker share price means it will be more expensive to access capital or bond markets or to get a loan. Coal is a very capital intensive industry so this is significant.

NamTaf 11y ago

It's a good move, that nevertheless retains a healthy dose of irony given the fund was developed almost entirely on the back of petroleum.

T2_t2 11y ago
I was going to say the exact same thing! "Our environmental destruction is fine. But yours? That is just too much!"

diffraction 11y ago

coal is in the process of consolidation/deleveraging/bankruptcy and they would be making this decision anyways. congrats on extracting social justice points from your business decision.

barney54 11y ago
Along with a heaping dose of hypocrisy. If the co2 from coal is bad, then the same is true for the coal from oil and natural gas.
- awakeasleep 11y ago
  Hey, I know this is silly because the fund isn't event taking these actions explicitly for environmental reasons, BUT if they were, your comment would be a great example of an Internet debate fallacy that I try and fight. If an entity is doing something 'bad', reducing the scope or amount of that behavior is neither hypocritical nor pointless. It doesn't matter if it's a big company that pollutes, or an individual trying to reduce a bad habit. Movement in the right direction is an essential part of things getting better.
  - msandford 11y ago
    According to that standard then if you got rich selling illegal drugs so long as you then start doing "good" things with your illicit gains after that, nobody can criticize you? Sure, I guess...
    - kirrent 11y ago
      Of course they can criticize you for selling illegal drugs in the same way you can criticize Norway for getting rich off oil. He's saying that praising that person for doing something like giving money to charity or anti-drug efforts isn't completely inconsistent. I disagree that it can't be hypocritical. If Norway was doing this for environmental reasons I think it'd be quite hypocritical. That doesn't mean it's not a good thing to do though.
  - 11y ago

1945 11y ago

It's likely not out of the goodness of their heart but rather coal's terrible performance. There is a bankruptcy filing every other week. This week alone the largest miner, Peabody, filed for bankruptcy.

peteretep 11y ago
Wouldn't that information already be priced in to the market?
- 1945 11y ago
  Absolutely, but it by no means marks the bottom. Have a look at the last 5 years of KOL (ETF because I can't recall the coal futures symbol).
  - peteretep 11y ago
    > but it by no means marks the bottom If you know with any degree of certainty at all which way an asset will move, you stand to make a gigantic amount of money. Everybody you have ever heard telling you which way an asset is moving is guessing just as much as people who tell you it's going to move the other way.
    - winfred 11y ago
      It isn't as much the fact that the asset will move, as the direction and the timeline that matters, as well as the availability of investment vehicles. If I'd wanted to profit on the knowledge that coal will go down, I'd have to short the stock which isn't free, so it is important for me to know on what time frame it will go down (if I knew it would go up, but not on what time frame, it would work just fine). Another example, I know lithium (the commodity) is going to go up, but 90% of the lithium market is dominated by 3 companies, each of which get less than 20% of their revenue from lithium mining, meaning I have no way of profiting from my knowledge.
      - 11y ago

outside1234 11y ago

Alternative Title: "Fund built from selling petroleum gets holier than thou with selling coal"

arrrg 11y ago
The fund … doesn’t? They just seem to be following new regulations, regulations that, apparently, aren’t even uncontroversial. The fund is not the Norwegian government, the Norwegian government is not the Norwegian parliament. This article doesn’t even say anything about what the fund thinks about this. It’s just matter of fact reporting on regulation changes and consequences. (All we know is that a majority in the parliament is in favor – and that’s why this law exists – and the minority government was “reluctant” concerning this law.) The article doesn’t even explicitly say anything at all about motives.
pm90 11y ago
Arguably, all of modern capitalism was built on the back of some very dirty and polluting technology. Would you say, then, that the capital of all the developed world is tainted?
- jacobolus 11y ago
  Not to mention significant amounts of slave labor, child labor, war profiteering, fraud, outright theft, etc. In other words, by similar logic it could be called “holier-than-thou” for westerners to have any standards whatsoever about investment choices, because our wealth is built on all kinds of unsavory sources.
  - caminante 11y ago
    "by similar logic..." Please...do other countries currently have 22% of GDP tied to [slave labor, child labor, war profiteering, fraud, outright theft, etc.]? [1] http://ec.europa.eu/trade/policy/countries-and-regions/countries/norway/ http://ec.europa.eu/trade/policy/countries-and-regions/count... edit: In other words, by similar logic it could be called “holier-than-thou” for westerners to have any standards whatsoever about investment choices, because our wealth is built on all kinds of unsavory sources. I also find it ironic that "westerner" in your world doesn't seem to include Norwegians ;-).

frogpelt 11y ago

This is more a press release than reportable news. The companies were sold last year.

Animats 11y ago
Well, it's good that they sold last year, because Peabody Coal went bust last week.

sneezeplease 11y ago

Good move by Norway!! Can you read this? I cant tell if I am shadow banned? Please give me a vote in any direction

rory096 11y ago
>I cant tell if I am shadow banned? Yes, you are. Seems to have happened after this comment: https://news.ycombinator.com/item?id=10291099 https://news.ycombinator.com/item?id=10291099
- jakub_h 11y ago
  Did I miss something or was HN bought out by Reddit, of all things?
dang 11y ago
We banned your account early on because you appeared to create it to post trollish comments here. If that's wrong, you're welcome to email us at hn@ycombinator.com. We're happy to unban people when there's reason to believe they will only post civil, substantive comments in the future.

baccredited 11y ago

The comments here are very negative so I'll share a little background on this Norway fund in case you haven't heard of it. Norway started making money from oil reserves and knew they wouldn't last forever. So they invested all the profits in a fund that bought stocks. Now the value of the fund, if liquidated, would net over $1 million per Norwegian citizen. read more: http://www.bbc.com/news/business-28882312 http://www.bbc.com/news/business-28882312

borge 11y ago
The math seems to be a bit off $860B / 5000000 people (2013, wikipedia) = $172000
- stanmancan 11y ago
  "The fund, worth about $800bn (£483bn), owns 1% of the entire world's stocks, and is big enough to make every citizen a millionaire in the country's currency, the kroner." $860B USD = 7T KR / 5M people = 1.4M KR each
  - vinay427 11y ago
    I'm not sure why you responded to the parent, instead of the grandparent, which first asserted "$1 million" implying dollars.
    - stanmancan 11y ago
      Because the parent was the one I was clarifying for.
- simonebrunozzi 11y ago
  I suggest you use "," when writing long numbers -> 5,000,000 This way it's easier to read for the rest of us.
  - borge 11y ago

jaibot 11y ago

"Investors other than Norway invest $860B in coal; money remains fungible and markets remain pretty efficient"

woah 11y ago
Midbrow dismissal
- jaibot 11y ago
  I mean, yes, but I'll change my mind if I notice all the higher brows disagreeing.
PascalsMugger 11y ago
Well whoever acquired Norway's stake in the oil industry probably lost out since making that investment last year, so that fungible money now is gone.

electic 11y ago

The bigger question about Norway's $860BB fund is the price of oil. Right now oil is trading at $39.75[1] a barrel. Now that the Doha deal fell through earlier today, it is highly likely that oil will further fall over the coming weeks. Norway, and other sovereign funds, are now liquidating assets to make up for the shortfall in revenue.[2] We're talking about $5.7T in assets across these oil derived sovereign funds. That's a lot of selling folks. [1] http://www.investing.com/commodities/crude-oil-streaming-chart http://www.investing.com/commodities/crude-oil-streaming-cha... [2] http://www.institutionalinvestor.com/article/3533485/investors-sovereign-wealth-funds/oil-has-sovereign-wealth-funds-hitting-sell-button.html http://www.institutionalinvestor.com/article/3533485/investo...

NegatioN 11y ago
The withdrawal from coal is a year old decision[1] made my our parliament, which is as far as I see not based on plugging the holes in any way. We have a policy that states you can use up to, but not more than the expected surplus of the fund for the coming year. [2] So, I agree we're spending more than we used to do, but this is exactly the reason the fund was made in the first place. As long as politicians are curbed, and we stay within this rule, I'm not scared no matter how many billions are used from the fund. EDIT: and the core of my comment should have been, that I'm not sure this could be seen in the same context as other national funds, as we're "too big to fail"^tm [1] :http://e24.no/boers-og-finans/oljefondet-ut-av-kull/23459941 http://e24.no/boers-og-finans/oljefondet-ut-av-kull/23459941 [2] :https://snl.no/Handlingsregelen https://snl.no/Handlingsregelen
- kagamine 11y ago
  More scared about the number of people in the oil business competing for jobs as the number of redundancies increases. As a n expat Brit in Norway I'm already at a disadvantage when applying for work.

known 11y ago

GDP assigns no value to work that’s not done for a paycheck, and extracts no penalty for destruction of natural resources http://qz.com/663110/happiness-is-the-new-gdp/ http://qz.com/663110/happiness-is-the-new-gdp/

cavisne 11y ago

No problems with oil though! https://en.wikipedia.org/wiki/File:Norwar_Exports_Tree_Map_(2009).pdf https://en.wikipedia.org/wiki/File:Norwar_Exports_Tree_Map_(... We will see this fund drain to zero over the next few years easily, Norway is a completely broken economy with high unemployment masked by "scholarships".

imtringued 11y ago
>No problems with oil though! Electric cars are still not widespread yet and oil will always be used in planes, trucks or ships for long distance transport.
- notahacker 11y ago
  For that matter I'm pretty sure the growth of the petroleum driven automobile industry in Asia and Africa is going to vastly outstrip its gradual (and later perhaps even mandatory) replacement with electric vehicles in the West...

lazyjones 11y ago

The list of dropped companies is here, if anyone cares: http://www.nbim.no/en/transparency/news-list/2016/first-coal-exclusions-from-the-government-pension-fund-global/ http://www.nbim.no/en/transparency/news-list/2016/first-coal...