Norway's oil fund to invest in research meeting climate changes

Source: Xinhua| 2017-05-26 21:52:29|Editor: ying
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OSLO, May 26 (Xinhua) -- Norway's oil fund will get help from economists to meet future climate changes, newspaper Aftenposten reported Friday.

"There are two characteristics of the oil fund. We are very long-term and we are global," said Ole Christian Bech-Moen, director of the fund.

Climate change is also both global and long-term and could thus affect the risk and expected return of the oil fund's 8 trillion kroner (954 billion U.S. dollars), invested around the world.

Climate change can, for example, occur in terms of more extreme weather, more drought, more precipitation, temperature rise and rising sea level.

The effects may vary between regions in the world, industries and over time, Aftenposten wrote.

"We have announced information on research projects in order to increase knowledge about the connections between climate changes and our management of money," Bech-Moen told Aftenposten.

In order to meet climate changes, the oil fund has given two research projects to two prominent U.S. economists.

Robert Engle, from the New York University's Stern School of Business and the Nobel prize winner in 2003, has been awarded almost 324,000 U.S. dollars for the period of three years. Engle will try to measure the connection between climate changes and risk and return in the management of oil fund money.

Harrison Hong from the Columbia University in New York has been awarded 105,000 dollars to research and arrange two conferences. Among other things, he will try to find out if today's financial markets are influenced by the climate risk.

"The hope is that, based on research from Engle, we will know more about the extent to which we should change our investments as a result of climate change," Bech-Moen said.

The two largest investments of the oil fund at year-end were in the food company Nestle and the oil company Shell.

More drought somewhere and more flood elsewhere can affect prices on Nestle's raw materials. This again affects the price of the products, which affects the sale and thus the trading course and dividend.

Shell sells oil and gasoline, which are the main sources of climate change. The oil company can be affected by sharpening climate taxes and the growth in the number of environmentally friendly electric cars.

In this way the research projects will provide Bech-Moen with pointers for balancing the shares in Shell and those in the electric car manufacturer Tesla.