spaines
Is oil-rich Norway paying the price?

Is oil-rich Norway paying the price?

23-03-2020 | Estadísticas extraordinarias
Sustainability is often full of contradictions, as can be seen in the case of an oil-rich country which is warming faster than others – Norway.

Speed read

  • Oil-rich Norway is heating up faster than other countries
  • It tops the current RobecoSAM Country Sustainability Ranking
  • Coronavirus shows a strong and stable state is also important

What has happened?

The Scandinavian nation which extends beyond the Arctic Circle is heating up faster than the global average of around 1-1.5 degrees Celsius above pre-industrial levels. Winter temperatures are 8-9 degrees Celsius over normal, according to research from the country’s Meteorological Institute.

In January, Norway recorded the highest ever temperature seen in winter of 19 degrees Celsius in the town of Sunndalasora, breaking the previous record of 18.6 degrees Celsius set in 1989. The temperature rise threatens wide-scale melting, posing a risk to flooding, wildlife and tourism, and even exposing the country to disease-bearing insects that it currently avoids due to its usually cold climate.

Polar regions are heating faster than more temperate areas due to the ‘ice-albedo feedback’, where land laid bare by melting ice absorbs more sunlight, causing more heating, which causes more melting. Meanwhile, warmer oceans are gradually eating away at coastal glaciers, melting them even further.

Síganos ahora también en Instagram
Síganos ahora también en Instagram
Siganos
Norway is heating faster than other countries. Source: Norwegian Meteorological Institute.

Why is it important?

Norway was named as the world’s most sustainable country in the January 2020 edition of the RobecoSAM Country Sustainable Ranking. As one of the world’s richest and most stable nations, its environmental, social and governance (ESG) credentials include some world-beaters.

For environmental factors, 98% of its energy comes from renewable sources led by hydroelectric power, and it has the highest proportion of electric cars in Europe. On the social score, Norway has one of the best gender equality ratios in the world and very low rates of social inequality. And on governance, the country has long been free of corruption and poor corporate practices.

Yet it is also one of the largest oil producers in the world, pumping 1.6 million barrels of oil a day, and making so much money from it that Norway now has the largest sovereign wealth fund in the world. Its contribution to global warming through carbon emissions from oil use is disproportionately large – so it may be karma that the country is also disproportionately heating.

What does it mean for investors?

However, it is possible to reconcile the apparent paradox of the world’s most sustainable country also being a major oil exporter, and now “reaping what you sew” with global warming, says Max Schieler, compiler of the biannual ranking.

“In our philosophy, sustainability includes – but is not limited to – the use of fossil fuels and climate change,” says Schieler. “Even though it has been the main focus of attention in the recent past, climate change is also only one of the major factors driving the current mass extinction, biodiversity loss and ecosystem damage.”

“Sustainability is also not equal to environmental sustainability, but comprises a social component as well. This is especially apparent during the current coronavirus pandemic, which is testing the stability of health systems and resilience of economies all over the world.”

“And last but not least, it is the robustness and efficiency of state institutions – a key aspect of the governance dimension – that play a crucial role in how a country can cope with such a crisis. Hence, it is the entire ESG profile that is decisive for a country’s sustainability performance and economic success in the long run, and it is with this holistic viewpoint that Norway has earned his top mark.”

Estadísticas extraordinarias
Estadísticas extraordinarias

Cada mes, analizamos estadísticas extraordinarias relacionadas con la sostenibilidad global. ¿Qué significan? ¿Cuáles son sus implicaciones para los inversores?

Artículos relacionados
Los temas relacionados con este artículo son: