The New York Times – Stanley Reed

Norway’s economy is highly dependent on oil and gas production, yet the Nordic country’s largest private pension fund manager, Storebrand, worries about the risks of investing in companies that extract fossil fuels. Figuring that tighter regulations on carbon emissions will emerge in the coming years in an effort to combat climate change, Storebrand has decided not to invest in businesses that it believes will be hurt most by those new rules: coal companies and large producers of oil from tar sands.

“The business case is the main driver for what we do; companies with a sound and systematic environmental performance also perform better financially,” said Christine Meisingset, Storebrand’s head of sustainability.

Ms. Meisingset and Storebrand, which manages about 500 billion kronor, or about $74 billion, are among the fund managers beginning to think skeptically about fossil fuel companies — not so much because they or their clients disapprove of their activities, but because they think the securities issued by these companies may prove poor long-term investments.

The reasoning, which has caught the attention of major oil companies like Royal Dutch Shell, is that after a period of relative inaction, world governments may be heading toward adopting tougher rules on emissions, transforming the economics of the energy business.

Read Stanley Reed’s article on The New York Times website.