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Norway pension fund sheds Canadian, Russian oil sands assets

Kommunal Landspensjonskasse gjensidig forsikringsselskap, or KLP and KLP Funds, which are the the largest pension fund in Norway, have divested approximately US$58 million of the shares and debt of four Canadian oil sands producers and a similar company in Russia.

The divestments include more than US$33 million in equity and US$25 million of bonds in Canada's Suncor Energy Inc., Husky Energy Inc., Cenovus Energy Inc. and Imperial Oil Ltd. and Russia's Tatneft PAO, the company said in an Oct. 7 statement. KLP said it is reducing its exposure to companies involved in activity that is not aligned with a 2 degree Celsius climate target, referencing a European Union policy target proposed in 1996. KLP said the divestiture comes on the heels of its decision to divest coal companies from its portfolios.

"KLP and KLP funds will now exclude companies that have more than 5% of their revenue coming from oil sands-based companies," CEO Sverre Thornes said in the statement. "This builds on our recent move to go coal-free. Together, these industries represent highly risky and environmentally damaging operations which can now be replaced by clean energy alternatives through renewable power like solar and wind, battery storage, and the growth of electric vehicles."

Many fund managers are segregating or shedding investments in fossil fuels in response to customer demands to shun industries that are seen as contributing to global warming. The oil sands have become a target for environmental groups that claim oil produced from tar-like bitumen is more carbon-intensive than other crudes. Canada's oil sands producers, including Cenovus and Canadian Natural Resources Ltd., claim their emissions from producing crude from the giant Athabasca formation in northeastern Alberta are below the global industry average.

The four Canadian companies had a combined market capitalization of about C$110.5 billion, or US$83 billion, as of Oct. 4. Calgary, Alberta-based Imperial is one of Exxon Mobil Corp.'s Canadian subsidiaries. Thornes said he hopes other global investors will follow KLP's lead in fossil fuel divestment.

"As the largest pension fund in Norway, KLP also wants to send a signal to the markets that oil sands should not form part of the current and future energy supply," Thornes said. "We hope that other large asset managers will follow this example. By going coal- and oil-sands free, we are sending a strong message on the urgency of shifting from fossil to renewable energy."