©Bloomberg

Norway’s $900bn oil fund has underlined its ethical credentials by adding US utility Duke Energy to a list of companies it is barred from investing in due to the risk of “severe environmental damage”. 

The world’s largest sovereign wealth fund put Duke on its list of more than 110 companies that it will not buy shares in, which includes Airbus, Boeing, Philip Morris, Rio Tinto and Wal Mart. 

The oil fund backed a recommendation from Norway’s council of ethics — an independent body that reviews corporate behaviour — that Duke had “repeatedly discharged harmful substances from a large number of ash basins at coal-fired power plants in North Carolina”. 

The Norwegian fund is one of the most influential investors in the world, owning on average 1.3 per cent of every listed company globally, and its decisions on which businesses to exclude are often followed by other shareholders. 

The fund owned a 0.62 per cent stake in Duke — worth $304m — at the end of last year but sold all its shares before announcing the utility’s exclusion from its investment universe, as it typically does. 

Duke had been lobbying the fund to avoid being banned under Norway’s attempts to exclude any company deriving more than 30 per cent of its business from coal, according to local press reports from the US. 

But the council of ethics instead centred in on the ash basins.It said in April it was recommending the fund exclude Duke Energy and three subsidiaries “due to the unacceptable risk of these companies being responsible for severe environmental damage”.

“For many years, these companies have among other things repeatedly discharged environmentally harmful substances from a large number of ash basins at coal-fired power plants in North Carolina,” it added.

Several court rulings have ordered Duke and the subsidiaries to remove or seal the ash basins, but the measures would not be completely carried out for 10 to 15 years, said the council.

Norway’s oil fund was among the first state-backed investors to name publicly the companies it was excluding.

It started more than a decade ago, focusing initially on the makers of arms such as anti-personnel landmines, cluster munitions and nuclear weapons.

The oil fund added tobacco producers in 2009 and coal companies this year. 

Duke said: “It is unfortunate that [the oil fund] did not consider Duke Energy’s proactive actions to enhance our environmental stewardship and close ash basins across our jurisdictions.”