Norway’s $1.3tn oil fund broadens ESG screening to smaller companies
World’s largest sovereign wealth fund seeks to regain place as one of the top responsible investors
Norway’s $1.3tn oil fund will screen the hundreds of new companies it adds to its portfolio each year for environmental, social and governance risks as the world’s largest sovereign wealth fund seeks to regain its place as one of the leading responsible investors across the globe.
Nicolai Tangen, chief executive of the fund, told Norway’s parliament on Monday that it had only screened the biggest new companies for such risks before adding them to its portfolio while the smallest companies were added automatically.
Now the fund will screen all the 500 to 600 companies that are typically added to its reference index each year and decide whether to invest in them or not, or start active ownership measures such as monitoring.
“It’s a very natural extension of what we’ve been doing. You just don’t want to have rotten apples. You want to keep the worst companies out,” Tangen told the Financial Times after the parliamentary hearing.
Norway’s oil fund was one of the pioneers of ethical investing this century and has attracted heavy attention for its exclusions of entire industries such as tobacco, nuclear weapons and more recently coal, as well as divestments of individual companies such as Walmart for breaching labour rights and Rio Tinto for environmental damage.
But in recent years many other investors have focused on ESG risks, and the oil fund has faced criticism in Norway for being slow to keep up. Starting this year, the fund is publishing its voting intentions for all annual meetings five days beforehand.
Tangen told parliament on Monday that he had been impressed by the fund’s ESG work but that it was “far from done”, adding that he wanted it to become a global leader in responsible investment.
Asked by the FT if that meant he conceded the fund was no longer a leader, Tangen said: “It’s very important never to call yourself a leader in anything. It’s always better to be an underdog. There’s always room to improve.”
Oystein Olsen, governor of Norway’s central bank, which houses the oil fund, said: “The world is continuously changing, it’s not standing still. There are new challenges. To be a global leader, which is still the ambition, we have to move on.”
Tangen insisted the screening of newly listed companies was “not a function of IPO quality going down” but was merely something the fund needed to do. Its task will be made easier since the government decided this year to cut the number of companies in its reference index from the current 9,000 to about 6,600.
Of the 500 to 600 new companies in which the fund invests in a typical year, about 50 per cent to 70 per cent are in developed markets and go automatically into the portfolio. The remaining 30 per cent to 50 per cent are in emerging markets, where the fund uses external portfolio managers who avoid about two-thirds of companies in the index, the fund added.
That means the new screening will mostly affect smaller companies in developed markets such as the US and Europe. The fund has sold out of about 300 companies since 2012 due to ESG problems, something it calls risk-based divestments.
The fund also committed itself to keeping working-from-home practices after the Covid-19 pandemic. Tangen told parliament that workers would be allowed up to two days at home each week, with all meetings in the office scheduled for Tuesdays and Thursdays.
Electric vehicles: charging shares are starting to buzz
Both charging point operators and equipment manufacturers promise rich returns to investors
Rapid acceleration describes far more than just the driving experience. As electric vehicles (EVs) grab an increasing share of new car sales, opportunities for investors continue to race into view. Providers of charging infrastructure, as well as automakers, are moving at a rapid pace.
Governments in the US and Europe are going all in on electric vehicles to reduce carbon emissions. The infrastructure to power the vehicles is key to a transition that could turn half of all European new car sales electric by the end of the decade. Two distinct routes for investors have emerged: charging point operators and equipment manufacturers. Both promise rich returns as revenues in this rapidly growing sector gather speed.
International oil companies have staked a claim on charging networks. Their large estates of petrol stations provide a lead that is being bolstered with acquisitions. Shell is buying on-street charging network Ubitricity, having acquired NewMotion in 2017. It has a target of 500,000 chargers by 2025.
Fast charging can take only 20 minutes and is ideal for top-ups away from home or work. It requires expensive equipment. Holland’s Fastned is building its own fast-charging network and expects 170 stations to be operational this year. Its shares have risen fivefold over the past year and now trade at 74 times this year’s expected revenues.
Valuations for equipment manufacturers have also soared. Norway’s Zaptec has risen more than threefold since listing last October. The stock now trades at 10 times expected revenues. Shares in Chargepoint of the US remain elevated at 37 times expected revenues. EVbox, owned by French utility Engie, is soon expected to join the US market via a reverse takeover at a 7 times revenue multiple.
Swedish-Swiss industrial conglomerate ABB recently announced the internal separation of its EV mobility division. It might be worth $3bn if a mooted initial public offering goes ahead and values it at 10 times this year’s sales. Divisions in Siemens and Schneider Electric present a similar proposition for value-maximising managers.
Gapping down
In reaction to earnings/guidance:
- EL -3.8%, CTB -1.7%, AMG -0.7%
Other news:
- XOG -4.2% (files for 15,930,594 share common stock offering by selling shareholders)
- SPCE -1% (reschedules Q1 earnings report to May 10 due solely to the accounting treatment for the warrants)
- OGI -0.9% (confirmed that Greg Engel is stepping away from his role as CEO effective today)
- TXMD -0.8% (presents Phase 3 menstrual bleeding profile data for ANNOVERA)
Analyst comments:
- VICI -0.9% (downgraded to Equal-Weight from Overweight at Morgan Stanley)
- WY -0.5% (downgraded to Equal-Weight from Overweight at Stephens)
Gapping up
In reaction to earnings/guidance:
- LDI +5.8%, AKTS +2.8%, ENBL +2%
Other news:
- BTX +37.2% (enters into purchase agreement with Lincoln Park Capital wherein co may sell $20 mln of shares to Lincoln Park)
- OCGN +11.5% (reports on studies showing COVAXIN potentially effective against three key variants of SARS-CoV-2)
- AMPH +7.7% (receives FDA approval for morphine sulfate injection - Pump-Jet Prefilled Syringe System)
- LTRN +5.9% (entered into a research and development collaboration with Actuate Therapeutics)
- GILT +5.4% (enters strategic agreement valued at tens of millions of dollars with a large government corporation in Asia Pacific)
- CABA +5% (reports acute safety data from the first dose cohort in DesCAARTes trial)
- GNFT +4.9% (launches NASHnext)
- ADVM +4.6% (Presents Long-term Data through March 10, 2021 from the OPTIC Trial of ADVM-022 Intravitreal Gene Therapy in Treatment-experienced Wet AMD Patients at ARVO 202)
- GENI +4.3% (announces that it has agreed to acquire FanHub Media Holdings Pty Ltd )
- FOLD +4.1% (reports successful pre-BLA meeting with FDA for AT-GAA)
- PROG +3.2% (presents new data from Preecludia preeclampsia rule-out test verification study)
- MRNA +3.2% (receives Emergency Use Listing by the WHO for its COVID-19 vaccine; announces supply agreement with Gavi for up to 500 million doses of COVID-19 vaccine Moderna for COVAX to help end COVID-19 pandemic in lowest income countries)
- AVRO +2.7% (provided an update on its regulatory plans for AVR-RD-01, the first investigational lentiviral gene therapy for Fabry disease)
- TLRY +2.5% (Tilray and Aphria (APHA) announced the completion of the previously announced business combination)
- LI +2.3% (April deliveries)
- SIVB +1.9% (reiterates that it will not increase purchase price in transaction with Boston Private Financial (BPFH))
- GMTX +1.8% (Presentation of Preclinical Data at 2021 Association for Research in Vision and Ophthalmology (ARVO) Annual Meeting)
- GME +1.6% (expands North American fulfillment network through its entry into a lease of a 700,000 square foot fulfillment center in York, Pennsylvania)
- SABR +1.5% (files for common and preferred stock offering by company or selling shareholders)
- XPEV +1.3% (April deliveries)
- NVS +1.1% (reports Phase III Beovu data met primary endpoints)
- LH +1% (to acquire select operating assets and intellectual property from Myriad Genetics' (MYGN) autoimmune business unit, including the Vectra rheumatoid arthritis assay) .
Analyst comments:
- PTEN +5% (upgraded to Overweight from Equal Weight at Barclays)
- CVNA +3.2% (upgraded to Buy from Neutral at BofA Securities)
- BKR +2.8% (upgraded to Overweight from Equal Weight at Barclays)
- HAL +2.4% (upgraded to Overweight from Equal Weight at Barclays)
- ESRT +2.1% (upgraded to Outperform from Underperform at Evercore ISI)
- USPH +1.8% (upgraded to Buy from Hold at Jefferies)
- DKNG +1.4% (upgraded to Outperform from Market Perform at Cowen)
- WELL +1% (upgraded to Outperform from Sector Perform at RBC Capital Mkts)
Early premarket gappers
- Gapping up:
- BTX +55.2%, ADVM +7.9%, GNFT +5.8%, MRNA +2.4%, LI +2%, GMTX +1.8%, L +1.8%, PROG +1.6%, XPEV +1.5%, DELL +1.3%, TLRY +1.3%, BRK.B +1.2%, EPD +1.2%, AMPH +1.1%, ULCC +1%, GTN +0.9%, NVS +0.8%, ENBL +0.8%, UAL +0.6%, NDAQ +0.6%, AZN +0.5%
- Gapping down:
- XOG -4.2%, SIVB -1.5%, SPCE -1.4%, WLL -1.4%, OGI -0.9%, SABR -0.7%
Next Generation of Covid-19 Vaccines Could Be Pill or Spray
Drugmakers and government labs are developing doses easier to take and transport to tackle coronavirus variants and avert future pandemics
The next generation of Covid-19 vaccines in development could come as a pill or a nasal spray and be easier to store and transport than the current handful of shots that form the backbone of the world-wide vaccination effort.
These newer vaccines, from U.S. government labs and companies including Sanofi SA, Altimmune Inc. and Gritstone Oncology Inc., also have the potential to provide longer-lasting immune responses and be more potent against newer and multiple viral variants, possibly helping to head off future pandemics, the companies say.
Vaccines currently authorized for use in the U.S. from Pfizer Inc. and its partner BioNTech SE, as well as Moderna Inc., must be transported and stored at low temperatures and require two doses administered weeks apart.
Many of the next-generation vaccines are in the early-to-middle phase of human testing, which means they may not become available until later in 2021 or in 2022. There is no guarantee the vaccines will succeed in testing, and some of the companies developing them, such as Altimmune and Gritstone, have never brought a vaccine to market.
If proven to safely protect people from Covid-19, the new vaccines could serve as boosters in the U.S., where a majority of the adult population is expected to be inoculated by summer with currently authorized vaccines from Pfizer, Moderna and Johnson & Johnson. Infectious-disease specialists increasingly expect periodic boosters will be needed to extend the duration of protection from the new coronavirus and to build defenses against variants. They also are looking into whether giving a person doses of two different vaccines can improve their effectiveness.
New vaccines could also be used as primary vaccinations in countries that are lagging behind in mass immunization campaigns.
“It’s critically important down the road to have vaccines that are easier to handle and have better cold-chain characteristics,” said John Mascola, director of the vaccine-research center at the National Institute of Allergy and Infectious Diseases.
Altimmune, of Gaithersburg, Md., is developing a Covid-19 vaccine that is administered as a nasal spray, similar to the FluMist influenza vaccine from AstraZeneca PLC that is a popular choice for children for seasonal flu vaccination.
“It’s a very easy and efficient way to administer the vaccine,” said Scot Roberts, Altimmune’s chief scientific officer. “You don’t need needles and syringes.”
The vaccine uses a modified version of a harmless virus called an adenovirus, which is engineered to carry a genetic code that instructs the body’s cells to make the spike protein from the coronavirus. This induces an immune response, including the production of antibodies in the blood, building a defense against the real virus.
The design is similar to injected Covid-19 vaccines from Johnson & Johnson and AstraZeneca. But because Altimmune’s vaccine is administered as a nasal spray, it also might induce a type of immune response known as mucosal immunity, which could help clear virus from the respiratory tract, thereby helping reduce virus transmission by vaccinated people, according to Dr. Roberts.
“Having this mucosal immunity that can both block infection on its way in and also neutralize it when it’s on its way out could be very important from a public-health perspective,” he said.
By midyear, the company expects results of an early-stage study testing whether the vaccine safely induces the desired immune response.
Vaxart Inc. of South San Francisco, Calif., is developing a Covid-19 vaccine as a tablet that can be swallowed. A small, early-stage study showed it triggered immune responses against the virus and has potential to protect against variants, the company said in February.
Vaxart plans to start a midstage, or Phase 2, study of the tablet vaccine by midyear, a spokesman said.
Sanofi and GlaxoSmithKline PLC are jointly exploring potential vaccines against new variants, while also testing a modified version of their original injected Covid-19 vaccine candidate, which studies showed failed to induce a sufficient immune response in older adults.
Pfizer and Moderna also are chasing second-generation shots, including ones aimed at variants, as well as new formulations that improve storage and shipping. Their first-wave vaccines, authorized by the Food and Drug Administration in December and more than 90% effective at preventing Covid-19, are generally safe, but require two doses as well as low-temperature shipping and storage, and have a limited shelf life once thawed.
Government and academic researchers also are working on new shots, including at the Walter Reed Army Institute of Research and NIAID.
WRAIR recently started a clinical trial of its experimental Covid-19 vaccine that could provide broader protection against variants. Eventually, U.S. Army researchers hope to make a vaccine to protect against all types of coronaviruses in a single shot, said Dr. Kayvon Modjarrad, the institute’s director of the emerging infectious diseases branch.
That goal is shared by Drew Weissman, a University of Pennsylvania professor and immunologist who did crucial research on the technology behind the Pfizer and Moderna vaccines. Dr. Weissman says he fears that new pandemics may arise in the years ahead involving pathogens even more dangerous than the coronavirus behind Covid-19, known as SARS-CoV-2.
“It’s nearly definite we will have more pandemics in the future,” he said.
Dr. Weissman also is working on a vaccine to protect against all coronaviruses, including those that cause the potentially lethal diseases SARS and MERS. The vaccine has shown evidence of protecting mice from disease, he said.
Another approach toward next-generation immunization is to study whether combining multiple existing Covid-19 vaccines is more effective than a single vaccine.
Government scientists hope to learn how to use different booster vaccines to improve the duration of protection while safeguarding against dangerous variants of the virus, says John Beigel, the associate director for clinical research in the NIAID’s division of microbiology and infectious diseases, who is part of the effort.
The scientists, working with academic partners, hope to start the study in the months ahead and to have some answers this summer. Oxford University is conducting another study involving mixing vaccines.
Nelson Michael, director of the Center for Infectious Diseases Research at WRAIR, calls it the government’s “Cocoa Puffs/Trix” experiment.
“It’s looking at what’s on the shelf, taking a little of this first and then a little of that next, an approach like a kid would do with cereals,” he says.
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DAX:
- No major moves
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