Alaska’s $67B sovereign fund irked by green-leaning banks

Janet Lorin March 03, 2020

NEW YORK (Bloomberg) --Alaska’s $67 billion sovereign wealth fund, a pool that invests some of the state’s revenue from oil and other resources, is expressing displeasure with banks that oppose financing new Arctic exploration or development.

Alaska Permanent Fund Corp. asked for a “productive dialogue” with JPMorgan Chase & Co., saying it was disappointed by the bank’s decision to restrict its investment decisions in the Arctic, according to a Feb. 28 statement.

“It is important that our partners understand us,” the wealth fund said in its statement, indicating it will remain a client of firms like JPMorgan. “We encourage our colleagues to take the time to understand Alaska, its complexity and its economy.”

Financial institutions have responded to pleas from conservationists to give environmental, social and governance issues more weight in investment-related decisions. Students have called for their college endowments to divest from fossil fuels, private equity firms have announced new ESG-themed funds and several banks have said they won’t fund Arctic exploration, an area opened up by President Donald Trump’s administration.

The Alaska fund has holdings with JPMorgan of more than $1.1 billion, including $86 million in company stock. It also uses the company as a broker and counterparty for derivatives and to manage overnight cash, according to Paulyn Swanson, a spokeswoman.

Alaskans voted in 1976 to establish the permanent fund, and the state legislature created APFC in 1980 to manage its investments.

JPMorgan announced its plan last week as part of a sweeping policy statement on fossil-fuel financing, responding to growing pressure from activists. The bank also said it will no longer advise or lend to companies that get the majority of their revenue from the extraction of coal.

A spokesman for New York-based JPMorgan declined to comment on the wealth fund’s statement. Oil executives and state officials including Governor Mike Dunleavy expressed dismay with the bank’s decision, the Anchorage Daily News reported on Feb. 28.

Goldman Sachs Group Inc. announced a similar measure in December as part of an environmental policy framework that it will decline any financing transaction that directly supports new upstream Arctic oil exploration or development.

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