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Pension manager pulls out of coal

Norway’s largest manager of pension funds, KLP, has decided to sell off all its investments in coal companies. KLP executives will instead invest half-a-billion kroner (around USD 75 million) in renewable energy ventures.

Sverre Thornes, chief executive of Norway's largest pension fund manager KLP, is summarily dropping coal investments in favour of renewable energy. PHOTO: KLP
Sverre Thornes, chief executive of Norway’s largest pension fund manager KLP, is summarily dropping coal investments in favour of renewable energy. PHOTO: KLP

KLP (Kommunal Landspensjonskasse) bills itself as Norway’s largest life insurance company but is best known for managing the pension funds of public sector employees. It has total assets of nearly NOK 500 billion, more than 860 employees and is a major investor in the stock market. KLP locally ranks second only to the country’s huge sovereign wealth fund, known as the oil fund, in terms of clout and financial muscle on the investment front.

Now it’s decided that it wants “to contribute to the urgently needed switch from fossil fuel to renewable energy,” according to a statement from KLP on Wednesday. After a query from one of its local municipal clients, the township of Eid in the mountainous Norwegian county of Sogn og Fjordane, KLP said it has “assessed whether it is possible to contribute to a better environment by pulling investments out of oil, gas and coal companies” without affecting future 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,” KLP’s chief executive Sverre Thornes told Norwegian Broadcasting (NRK). “We want our owners and customers to feel secure about that.” KLP isn’t pulling out of oil and gas companies, at least not yet, though, because it concluded that a sell-off now would adversely affect future pension fund returns.

KLP currently invests in around 3,000 companies worldwide and its decision to drop coal investments will mean that around 20 to 30 companies will be dropped from KLP’s portfolio. Included among them, according to NRK, are Peabody Energy Corp, CONSOL Energy Inc, Coal India Ltd, Shougang Fushan Re and China Coal Energy Co Ltd.

Thornes noted that KLP has long been a source of funding for Norwegian hydropower and already has “significantly larger investments in renewable energy than in oil, gas and coal companies combined,” Thornes said. Now the company will earmark an additional NOK 500 million for new renewable energy production capacity in “emerging economies where the need is great and the alternative is often coal,” he said.

‘Powerful signal’
KLP’s decision has delighted the mayor of Eid, Alfred Bjørlo from the Liberal Party (Venstre). He’s the local politician who contacted KLP last March and asked whether it was possible to pull his community’s pension funds out of coal, oil and gas without risking a loss of pension value. He got his answer on Tuesday.

“KLP’s move sends a powerful signal to other financial players both nationwide and internationally,” Eid told NRK. “The green shift has started, and now the transfer of capital from the fossil fuel sector to the renewable sector is beginning to roll.” Another major Norwegian insurance company, Storebrand, dropped 10 companies from its portfolio earlier this year that had a high degree of of energy production from coal.

Meanwhile, an expert group is currently evaluating whether Norway’s giant oil fund should also drop its investments in coal and oil companies, even though the fund’s money comes from Norway’s own oil industry revenues. Norway’s new conservative government set up the group last spring to examine the oil fund’s investments in fossil energy. The group’s conclusions are expected soon.

The oil fund (officially known as Statens Pensjonsfond Utland) reported earlier this year that it already had sold off its stakes in around 20 mining companies that extract coal and gold. The fund stated that it didn’t find such operations sustainable in the long term. Berglund



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