December 8, 2017


North Sea Oil & Gas - Fueling Great Accumulations of Wealth for the Long-Term Benefit of Norway's Future Generations

The foundation for the significant progress made in so many spheres of society in the 20th Century was...Oil!  The oil-producing nations of the world amassed great wealth with the marketing of oil and petroleum-derived products; those products enabled fantastic progress to be made in industry, government, agriculture, the consumer sector...throughout our modern society. 

A number of formerly categorized as "still developing nations" of the early 20th Century years became quite wealthy when oil deposits were discovered or exploited on their lands -- especially countries like Saudi Arabia and the United Emirates, and Kuwait and Iran and Iraq.

North Sea oil and gas exploration would bring great wealth to certain western nations in the second half of the Century.  One of these was Norway, with significant reserves identified (and exploited) beneath the often storm North Sea waters.

A strategic decision was reached internally in 1990 -- a stream of "surplus" revenues would be directed toward the country's Sovereign Wealth Fund (SWF), officially "the Government Pension Fund" - this inflow began in 1996 and since, the SWF has become the largest Sovereign Wealth Fund in the world. (There is a separate internal fund also receiving funds for domestic investment.)

The Norway SWF invests in 77 countries; the portfolio allocation is in equities (62%), fixed-income (34%) and real estate (3%). The return on investment in 2016 was almost 7%.

The Fund states that it is a "Responsible Investor," with a mandate to integrate responsible investment activities into the management of the fund. 

Sign of the times:  In the flow of news reports and commentaries about the trend to minimize or dis-invest shares of fossil-fuel companies in investment portfolios, comes news from the Nordic nation [the advice] that the Norway SWF should scale back or drop investments in oil & gas stocks. 

The Norges Bank, which manages the SWF's US$1 trillion in AUM, advised that such a step would make Norway less vulnerable to a permanent slide in Oil & Gas prices.  About 6% of the AUM is now in the sector (in such companies as Shell, BP, ExxonMobil). Shell contributed the most to the fund's return in 2016.

Important note:  There were holdings in about 9,000 public companies in 2016; the average holding in the world's listed companies was about 1.3% to 2%, and up to 5% in 28 companies. (Nestle is the largest holding in a single issuer.)

In North America, holdings are in 2,268 companies; 2,107 bonds from 582 issuers; and in 400 (office & retail) properties. Oil and Gas performed best in 2016, Norges Bank reported (29%).  One investment of note is Florida-based NextEra Energy, a U.S. company "driving the transition from coal-based power to clean electricity."

All of this is sort of inside baseball; the SWF is owned by the central government for the benefit of future generations; the Norges Bank operations are part of the government; the Finance Ministry will review the suggestions.  We will likely see important decisions taken by June 2019, according to the BBC.

It will be interesting to watch as the world's largest Sovereign Wealth Fund and one of the world's key responsible investors -- all integral parts of one of the world's important oil & gas countries -- make decisions on fossil fuel investments going forward.

BBC highlights of the latest developments are in our Top Story this issue. And there is more detailed information for you in the Norges Bank Annual Report for 2016.

Top Stories This Week...

Norway's state fund 'needs to drop oil and gas investments'
(Friday - November 17, 2017) Source: BBC - Norway's government has been told its state-run fund should drop its investments in oil and gas stocks. 


About Sustainability: Progress Is Being Made
- We See Forward Momentum!

3 Best Practices to Remember When Choosing a Sustainability Framework
(Tuesday - November 14, 2017) Source: Triple Pundit - Year after year, surveys show that consumers are increasingly interested in sustainability. They want more information about products, about labels, and are more careful with brand choices. 

Responding to Sustainability Surveys: A Primer for Suppliers
(Wednesday - November 15, 2017) Source: Supply Chain Management Review - In recent years, companies have started to take a closer look at the sustainability aspects of their supply chain. Many large companies are increasing their own sustainability commitments and are considering sustainability when... 

The KPMG Survey of Corporate Responsibility Reporting 2017
(Wednesday - November 15, 2017) Source: KPMG - KPMG’s Survey of Corporate Responsibility (CR) Reporting has been monitoring developments in the field of CR and sustainability reporting since 1993. For this report, now in its 10th edition, KPMG member firm professionals... 

How data can help build a sustainable supply chain
(Thursday - November 16, 2017) Source: Supply Chain Dive - When Dun & Bradstreet held a customer advisory forum this fall, they asked procurement professionals about their biggest pain points. Leading the list: having a sustainable supply chain and rooting out bribery and corruption in..

Sustainability: A Unique Opportunity for the Accounting Profession
(Thursday - November 16, 2017) Source: CPA Journal - The June 2016 debate between Edward Weinstein and Stanley Goldstein about the role of the CPAs in sustainability accounting (“Sustainability—Not GAAP Measurement,”) presented two views; in my opinion... 

Sustainable Investing: Coal-Free Top-Performing Funds Via Direct Cloud
(Friday - November 17, 2017) Source: Morningstar - As sustainability becomes less of a fringe issue among investors, understanding the impact that companies in a fund's portfolio have on the real world is becoming more integrated with the investment screening process. 

From Xerox To Tesla: Using Digital Product Skills For Sustainability
(Friday - November 17, 2017) Source: Forbes - Trucost, part of S&P Dow Jones Indices, is an analytics consultancy that advises companies and investors on managing ESG risk. 

Sustainable Investing: Coal-Free Top-Performing Funds Via Direct Cloud
(Friday - November 17, 2017) Source: Morningstar - As sustainability becomes less of a fringe issue among investors, understanding the impact that companies in a fund's portfolio have on the real world is becoming more integrated with the investment screening process. 

Designer Hailey Harmon Has A Solution To Fashion's Sustainability Problem
(Friday - November 17, 2017) Source: Forbes - The fashion industry is notorious for its negative environmental impact. Designer and entrepreneur Hailey Harmon is helping set a new standard for sustainability using an unexpected resource: fish. 

Is The Second Wave Of Sustainability Finally Here?
(Monday - November 20, 2017) Source: Refinery 29 - Sustainability is a buzzword many people are sick of hearing. It’s been overused and virtually lost its meaning (although trying to define it in practical terms is actually pretty hard). 

Path to Sustainability: Technology and the Modern Utility  
(Wednesday - November 22, 2017) Source: Electric Light & Power - Today’s utility industry is changing rapidly. Energy efficiency, renewable and distributed energy resources, new energy markets and high demand costs are putting great pressure on utilities to find ways to be sustainable. 

Web chat: How businesses can become more sustainable
(Wednesday - November 22, 2017) Source: Telegraph - Join us from 1pm on Tuesday 28 November to discuss how businesses can embrace more sustainable business models. 

Monitoring Progress in Sustainability in Agriculture and the Global Food Chain

How Much Do Big Agrifood Companies Really Know About Their Supply Chains'
(Monday - November 20, 2017) Associated Profiles : Sustainability Consortium (TSC)  Source: - A report by the Sustainability Consortium studying the procurement pipelines of large corporate food and agriculture players to find out how much they really know about the sustainability of the farms they sell to and buy from... 

Sustainability tools for beef community unveiled
(Tuesday - November 21, 2017) Source: Wisconsin State Flyer - The U.S. Roundtable for Sustainable Beef (USRSB) today announced the release of USRSB Sustainability Metrics, the latest tool helping those who raise, buy, and sell beef understand ways to balance and improve their...  

CSR & Sustainability: The Courage to Make a Difference
(Tuesday - November 21, 2017) Source: Natural Product Insider - More than ever, the way food companies source ingredients, and manufacture and distribute their products can significantly impact social and environmental performance, as well as how consumers view their brands. Sustainability...

Paper option increases food packaging sustainability
(Wednesday - November 15, 2017) Source: Packaging Digest - Skog for Food launched this fall in the U.S. combines FSC-certified paper with double-sided coating that provides barrier properties and permits production on f/f/s machines. 

Our Focus This Week on A Range of ESG Topics & Issues -- Things to Think About...

Tropical forests are now producing more carbon dioxide than they soak up
(Tuesday - November 21, 2017)Source: The Week - In other words, tropical forests are now a net carbon source rather than the carbon "sinks" they were previously thought to be. 

Nebraska State Regulators Approve Keystone XL Pipeline, Or Did They?
(Wednesday - November 22, 2017) Source: Forbes - The long delayed Keystone XL Pipeline project came a step closer to becoming a reality this week after the Nebraska Public Service Commission voted to approve the line, albeit with a strange twist. The commission failed to adopt... 

The 2018 Fortune Crystal Ball: 59 Predictions for the Year Ahead
(Wednesday - November 22, 2017) Source: Fortune - To help you discern what’s coming next, we’ve mined the forecasts, predictions, and projections from countless sources and polled Fortune’s in-house experts to bring you this look at the coming year. 

News for You From the Corporate Sector -Both Positive & Negative

Walmart Foundation funds farm sustainability effort  
(Wednesday - November 15, 2017) Source: Supermarket News - The Sustainability Consortium (TSC) said it has received a $375,000 grant from the Walmart Foundation for its efforts to improve reporting of sustainability metrics by agricultural firms. 

Levi Strauss Taps Outerknown, Startups to Drive Apparel Industry Sustainability
(Thursday - November 16, 2017) Source: Sustainable Brands - When it comes to tackling climate change, Levi Strauss & Co. (LS&Co.) believes collaboration is key. This very ethos is the driving force behind the company’s sustainability approach, and the reason behind the brand’s decision to... 

VW has a $12 billion plan for electric cars in China
(Thursday - November 16, 2017) Source: CNN

Trader Joe's Recalls Packaged Salads Over Concern They May Contain Glass or Plastic Fragments  
(Monday - November 20, 2017) Source: 

Monsanto On Track For Carbon Neutrality In 2021  
(Tuesday - November 21, 2017) Source: KTIC Radio

Researchers Publish Bombshell Report That Suggests Sugar Industry Conspiracy
(Wednesday - November 22, 2017) Source: The Daily Beast


News & Opinion: Asset Managers, US Pension Funds, Sovereign Wealth Funds

The Tennessee State Pension Fund Has A North Korea Problem…Really
(Monday - November 20, 2017) Associated Profiles : Tennessee Consolidated Retirement System (TCRS) Source: Dealbreaker - According to its 2016 annual report, the Tennessee Consolidated Retirement System (TCRS) has over $43 billion in assets. Presiding over those assets is CIO (and man who is really surprised to see you) Michael Brakebill: Earlier... 

Australia's Future Fund">Billions wiped from Australia's Future Fund
(Sunday - November 19, 2017) Associated Profiles : Future Fund (Australia) Source: ABC Australia - More than $2 billion has been wiped from Australia's Future Fund, with the uncertain global financial system blamed for the losses. The Board of Guardians of Australia's Future Fund has updated its figures for the quarter ... 


Roundtup: Hurricanes - Climate Change & Economic Upheavel

Science Confirms Hurricane Harvey Was Indeed ‘Biblical’
(Wednesday - November 22, 2017) Source: Bloomberg - “Harvey’s rainfall in Houston was ‘biblical’ in the sense that it likely occurred around once since the Old Testament was written.” 

Nearly 7 weeks after hurricane, more than 50% of Puerto Rico power generation offline 
(Monday - November 13, 2017) Source: Ars Technica - With more than 50 percent of the grid offline, previously-connected Puerto Ricans have been living off generators or solar panels for nearly 7 weeks, or they live without power


Trump Administration News / Affecting Directions on Governance and ESG

The FCC has unveiled its plan to repeal its net neutrality rules
(Wednesday - November 22, 2017) Source: Washington Post - Federal regulators unveiled a plan Tuesday that would give Internet providers broad powers to determine what websites and online services their customers can see and use, and at what cost.



G&A Institute Sustainability Update
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Governance & Accountability Institute's blog focusing on the sustainable world evolving daily before our eyes.  Read it, absorb it, question it and challenge.

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