Sony Kapoor, a former adviser to Norway's government, said the plan is "a belated victory for common sense over the powerful oil and gas lobby in Norway", calling on the fund to now boosts its "green" investments at least tenfold.
It invests Norway's revenues from oil and gas production for future generations in stocks, bonds and real estate overseas.
Norges Bank Investment Management, which runs Norway's $1tn oil fund, has recommended that the sovereign wealth fund ditches its investments in oil and gas stocks. The wealth fund, which controls about 1.5 percent of global stocks, proposes dropping %37 billion of shares in worldwide giants such as BP, Exxon Mobil Corp., Royal Dutch Shell Plc. and other holdings.
Matsen said "now is a good time" for the proposal because otherwise the new 70% threshold will result in the fund buying even more oil and gas shares because it tracks indexes that include such stocks.
"Our perspective here is to spread the risks for the state's wealth", Egil Matsen, the deputy central bank governor overseeing the fund, said in an interview in Oslo.
Norway, which relies on oil and gas for about a fifth of economic output, would be less vulnerable to declining crude prices without its fund investing in the industry, the central bank said Thursday.
The fund's biggest oil and gas holding at the end of 2016 was $5.36bn in Anglo Dutch firm Shell, followed by $3.06bn in ExxonMobil, $2.04bn in fellow U.S. oil firm Chevron, $2.02bn in the UK's BP, and $2.01bn in France's Total.
Norway is a major oil producer, and it has plowed its energy earnings into the fund in order to fund pensions and other government expenses.
"There is a substantial difference.in return between the oil and gas sector and the broad stock market in periods when the oil price changes substantially".
The fund is among the world's biggest investors in stocks, owning $667 billion worth of shares in over 9,000 companies globally.
Nicolò Wojewoda of 350.org Europe was also hopeful about the implications of Norges Bank's decision, calling it "yet another nail in the coffin of the coal, oil, and gas industry".
"This is the biggest pile of money on the planet, most of it derived from oil-but that hasn't blinded its owners to the realities of the world we now inhabit", said McKibben.
The Norwegian government said it would consider the proposal, but a decision should not be expected until next year and a "thorough assessment" was required.
It aims to reduce the exposure of the fund - and therefore the Norwegian government - to oil price fluctuations.
Oil and gas stocks would be replaced by investments in other companies, Matsen said.
If it backs the central bank's proposal, Parliament could vote on it in June 2019 at the earliest.