KLP boosts investment in renewables and reduces in coal

KLP has decided to invest NOK 500 million more in increased renewable energy capacity. At the same time, it is pulling out of companies which derive a large proportion of their revenues from coal. KLP is doing this because it wishes to contribute to the urgently needed switch from fossil fuel to renewable energy.

Last modified 20.11.2014

As Norway’s largest pension fund manager, KLP has a considerable responsibility. It is important to achieve a good return on investments in order to safeguard future pensions. At the same time, it is important to consider how the long-term investments it makes can contribute to sustainable development. At the request of Eid local government, KLP has assessed whether it is possible to contribute to a better environment by pulling its investments out of oil, gas and coal companies, without affecting future returns. The results of that assessment have now been published.

A contribution to necessary change
Society around us, public authorities, the UN and engaged KLP owners highlight the importance of reducing carbon emissions so that the world can achieve its target of keeping global warming below two degrees Celsius.

Commenting on the decision, KLP’s CEO Sverre Thornes said: “We have long been an important source of funding for Norwegian hydropower, and have significantly larger investments in renewable energy than in oil, gas and coal companies combined. That does not prevent us from going further in the same direction by earmarking 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. At the same time, we are divesting our interests in coal companies in order to highlight the necessity of switching from fossil fuel to renewable energy.”

KLP defines coal companies as coal mining companies and coal-fired power companies which derive a large proportion of their revenues from coal. At the very least, KLP will exclude those which derive 50 per cent or more of their revenues from coal-based business activities. Preliminary estimates indicate that this will lead to the sale of shares and bonds worth just less than NOK 500 million. The names of the companies to be excluded will be published in an updated KLP list on 1 December. KLP’s divestment from coal companies will also apply to the KLP Funds.

Limited to coal
Although divestment from coal companies will have no material impact on future returns, any withdrawal of investments in oil and gas companies would probably do so. Coal companies are considered to have the largest negative impact, both with regard to carbon emissions per unit of energy produced and local pollution in the vicinity of the coal-based facilities, even though there are significant variations between the different types of oil, gas and coal. This is the reason why KLP is only pulling its investments out of coal companies.

“KLP will continue to be an active and engaged owner of the companies in which we invest, with a clear ambition to influence them to take responsibility to lower greenhouse gas emissions,” said Sverre Thornes.

A driving force for good
As an investor, KLP has already engaged actively in support of the climate through its partnership with CDP. CDP is an international organisation that collects environmental performance data on behalf of investors and companies. Dialogue and the exertion of influence on the individual companies in which KLP invests is an important part of this strategy. KLP is already a major investor in renewable energy, with NOK 19 billion invested in Norway alone. Last year KLP also established a partnership with Norfund for direct investment in renewable energy and finance. A further NOK 500 million is now being set aside for direct investments in increased renewable energy capacity in emerging economies, where the need is greatest.

Here you find the carbon report.