But the report was the second piece of good news this week for proponents of sticking to oil and gas investments. On Tuesday, the fund said it eked out a 1.8 percent gain in the second quarter, helped in large part by the 13 percent return on its oil and gas stocks. The fund held 6.2 percent of its equity portfolio in oil and gas companies, or $41 billion, at the end of June.
Shares in oil companies traded higher, with Royal Dutch Shell Plc rising as much as 1.2 percent and BP Plc as much as 0.6 percent.
Thogersen, the commission chairman, said demand for oil will likely be high even in a scenario where the world meets the two degree climate target. “We don’t see that stock prices will just fall to zero in the whole sector,” he said in an interview. “That’s completely unrealistic.”
The commission’s report was met with derision by the activists and environmentalists who last year cheered the fund’s proposal to divest oil and gas.
“The argument that divestment will not be ‘enough’ is simply not a sound financial or public policy argument, and borders on being irresponsible,” said Sony Kapoor, managing director of Re-Define, a think tank. “It would seem that political considerations and the oil and gas lobby have won the day and basic risk management, sound economic analysis and common sense have lost.”
Tom Sanzillo, a director at U.S. energy finance think-tank, IEEFA, said the recommendation “will prove to be a failure and the Norwegian Government will be forced to change this as fossil fuel investments continue to drag down global investment indexes and the Norwegian economy.”
This story provided by Bloomberg News.