Published on November 28th, 2014 | by James Ayre2
Norway’s Biggest Pension Funds Manager Divesting From Coal
November 28th, 2014 by James Ayre
The largest pension funds manager in Norway, KLP, is divesting completely from coal energy, according to recent reports. The money involved — around NOK 500 million (~$75 million) — will instead be invested into renewable energy companies.
For those wondering, KLP is actually the manager for the pension funds of the country’s public sector employees — so the move is certainly one worth taking a closer look at for a number of reasons. Possessing total assets of around NOK 500 billion (~$84 billon), the manager is second in the world only to Norway’s state-owned oil-revenue fund with regard to investment clout.
That just-mentioned sovereign Oil Fund is actually due to announce a decision regarding its own investments in fossil fuels pretty soon — something else to keep an eye on.
Speaking on the topic of the recent decision to divest from coal, KLP’s CEO Sverre Thornes stated: “We are divesting our interests in coal companies in order to highlight the necessity of switching from fossil fuel to renewable energy.” (KLP is reportedly now planning to invest a further NOK 500 million into renewables in addition to the capital from the coal divestment.)
While that may be the stated reason for the move, one can’t help but wonder if harder emerging market realities also played a part in the decision.
With Norway’s long opposition to the project of the EU, its huge fossil fuel reserves, its impressive “energy independence” via hydroelectricity (which supplies roughly 100% of the country’s electricity), and the presumed opening of the Arctic to fossil fuels extraction over the next few decades, there are a number of interesting questions that come to mind right now….
Back to the topic at hand, though — KLP reportedly looked into the possibility at the request of one of its local municipal clients, the township of Eid in the county of Sogn og Fjordane. Owing to the query, KLP then “assessed whether it is possible to contribute to a better environment by pulling investments out of oil, gas and coal companies” while retaining good returns “on its investment portfolio.”
“We’re quite convinced that we will manage to deliver the same returns in the future without those from coal companies. We want our owners and customers to feel secure about that,” stated KLP’s chief executive Sverre Thornes, when asked.
Until this decision, KLP had been an investor in 20–30 coal companies worldwide — including Peabody Energy Corp, CONSOL Energy Inc, Coal India Ltd, Shougang Fushan Re, and China Coal Energy Co Ltd.