Norway pension giant KLP sells Australian stakes, cuts coal exposure
A climate-conscious Norwegian pension giant has sold stakes in big Australian firms as it cuts exposure to coal.
Norwegian pension fund giant KLP has sold its stakes in BHP, South32, Origin Energy and AGL Energy following a decision to cut its exposure to coal.
The $97 billion fund has exited $520 million of equity and bond exposure in 46 global companies - including the Australian operators -that obtain more than five per cent of revenue from coal-based activities.
“Coal cannot, and should not be part of the energy supply in the future. Therefore, we have decided to divest completely from coal,” KLP’s chief executive Sverre Thornes said.
“We are experiencing a strong commitment among our customers to intensify our climate efforts. By divesting completely from coal and at the same time increasing our investments in, among other things, renewable energy, we contribute to this.”
The move reflects a growing shift among pension and sovereign wealth funds to chop fossil fuel exposure as part of efforts to combat climate change and meet the goals of the Paris climate accord which aims to limit warming to well below 2 degrees above pre-industrial levels.
Most efforts are focused on cutting or eliminating thermal coal, a key ingredient for coal-fired power plants, which its critics argue can be replaced by gas or cheap renewable energy sources.
BHP is a major metallurgical coal producer, used in steelmaking, but also supplies thermal coal from big operations including its Mt Arthur mine in NSW’s Hunter Valley and a one-third stake in the Cerrejon mine in Colombia.
Perth-based South32, which was spun out of BHP in 2015, is looking to sell its thermal coal operations in South Africa this year after boss Graham Kerr said the fossil fuel had an uncertain future which did not support long-term investment.
Rio Tinto sold its coal mines last year and has since warned that it views climate change as the biggest threat to the viability of its business.
Origin currently expects to close its only coal-fired power plant, Eraring in NSW, by 2032. AGL will shut its Liddell facility in NSW in 2022 but its Loy Yang A unit in Victoria is scheduled to operate until 2048.
KLP’s decision in 2014 to exclude companies that derive more than half of their revenues from coal was then tightened to a 30 per cent cap in 2017, in line with investment rules which govern the nation’s $US1 trillion sovereign wealth fund.
KLP said the minimal five per cent threshold is in place given the challenges of getting accurate data from companies on revenues below that level.