The world's biggest pension fund is looking to sell it stake in companies that invest in the coal industry.

The latest player to join the global coal divestment is a big one; Norway’s state pension fund, a staggering AUD$1.186 trillion fund fuelled by Norway's state oil revenues.

Norway’s finance committee has voted unanimously for the fund to divest its holdings in any companies that get over 30 per cent of their output or revenues from coal.

But it will keep its large stakes in the oil industry.

The sales will start if the law is approved by parliament, with a final vote scheduled for World Environment Day on June 5.

A committee spokesperson said the decision was made on economically-rational, non-ideological grounds.

“Investing in coal companies poses both a climate risk and a future economic risk,” said finance committee deputy Svein Flatten.

Norway’s minority right-wing government had sought to soften the blow, by making provisions to only divest from “companies whose conduct to an unacceptable degree entail greenhouse gas emissions”.

But these measures failed, and the announcement has been claimed as a victory by the opposition and environmentalists.

“Coal is in a class by itself as the source with the greatest responsibility for greenhouse gas emissions, so this is a great victory in the battle against climate change,” opposition Labour MP Torstein Tvedt Solberg said.

“We won! Norway divested! Politicians throw coal out of the oil fund,” tweeted Greenpeace's Norway branch.

But some say it is a missed opportunity, as the pension fund could have used its considerable sway as a company shareholder to improve corporate practices.

The coal ban adds to a list of industries that the fund has stopped itself from investing in, including “particularly inhumane” weapons makers, the tobacco industry, as well as companies found guilty of violating human rights, causing serious environmental damage, or corruption.