Moving Money to Fossil Free

Stockholm (NordSIP) – Norwegian financial services company Storebrand Asset Management has unveiled a new fossil free bond program at French President Emmanuel Macron’s ‘One Planet’ summit in Paris this week. The move comes on top of recent substantive ESG efforts from Storebrand, including the launch of Storebrand Global ESG, a global equity fund aiming to achieve long-term capital growth by focusing on companies that maintain strong ESG credentials, in September and exclusions last month of coal businesses from its $80 billion investment universe.

President Macron’s ‘One Planet’ summit is intended as a follow-up to the 2015 Paris Climate Accord and as a thinly veiled rebuke to U.S. President Donald Trump’s withdrawal from the treaty. President Macron has announced winners for his ‘Make our planet great again’ initiative, which includes grants worth up to $1.8 million over a three- to five year period to scientists for them to conduct climate change research in France.

The new Storebrand fossil free bond fund – Storebrand Global Kreditt IG (UCITS) – is being launched with initial capital amounting to $1.3 billion. It is to be a fossil free, actively managed global bond fund, investing primarily in international corporate bonds issued by financial institutions and industrial companies within the OECD. The fund excludes investments in the energy sector and thereby avoids investments in companies linked to coal, oil and gas extraction. The fund will also refrain from investing in companies that have revenue of over five percent from the production or distribution of fossil fuels, or companies with large fossil reserves. The lowest credit rating at the point of investment has to be BBB-.

“The climate crisis is starting to engulf us, foreboded by the California wildfires,” said Storebrand AM CEO Jan Erik Saugestad. “Fossil free strategies are a powerful tool, helping us shift billions away from investments without a future, and into attractive investments with a positive climate impact. The rise of these funds responds to the growing public concern over climate change, and this is our contribution to the growing global divestment movement.”

“We are now actively challenging the investment plans of the oil and gas industry, and through our fossil free solutions we are also reducing our overall exposure to these oil and gas companies. This approach paves the way for our investment in the renewable energy industry, which is both profitable and sustainable,” Saugestad added.

The new fund has been timed to coincide with the One Planet Summit goals, and is designed to inspire others to follow suit by providing a tangible response that goes way beyond merely reporting, to affect concrete investor action itself.

“We cannot allow one unhinged President to distract and derail progressive, concrete actions,” Saugestad emphasised. “In fact, we still view North America as a priority growth market because even since Obama’s Clean Power Plan was ordered to roll back, US$ 30 billion has been invested in solar and wind projects, whilst the coal industry is walking dead: 30 gigawatts of coal power has been retired over the last three years.”

“We urge other investors and countries to end their complacency and take action now by moving their money, making it fossil free.”

Image: (c) Storebrand