KLP has completed its biannual investment portfolio review in relation to KLP and the KLP funds' guidelines for responsible investment. 20 new companies will be excluded as of December 2015.
KLP excludes an additional 12 companies due to coal-based activities: Adani Power, AGL Energy, Alliant Energy, Duke Energy Corp., Glow Energy Public Co., Korea Electric Power, NRG Energy, Inc., Pinnacle West Capital, Reliance Infrastructure, Shikoku Electric Power, The Southern Company, and WEC Energy Group.
KLP has decided, as a minimum, to not invest in companies that obtain 50 percent or more of their revenues from coal-based activities. In addition, KLP and the KLP funds take notice of the ethical guidelines for the Norwegian Government Pension Fund Global (GPFG). As a result, the limit for revenues from coal-based activities will be operationalized at 30 percent from December 2015.
- KLP follows the GPFG guidelines and has been clear that we will look to the new coal criterion for the GPFG and consider further exclusions consistent with this. We believe that we stand better poised to achieve the green shift when investors pull together. Therefore, we find it natural to operationalize a revenue limit of 30 percent, says Jeanett Bergan, Head of Responsible Investments for KLP Kapitalforvaltning.
KLP excludes Glencore due to the company's oil exploration off the coast of Western Sahara. KLP's conclusion is that this activity constitutes an unacceptable risk of violating fundamental ethical norms. KLP has previously excluded the French oil company Total for similar activities.
- The occupation of Western-Sahara has continued for several decades and is in many ways one of the world's "forgotten" conflicts. Presently, it is difficult to conclude that companies can engage in oil exploration on the continental shelf off the coast of Western Sahara in a manner consistent with international law, says Bergan.
BAE Systems, Fluor Corp., and Huntington Ingalls Industries
KLP has previously excluded BAE Systems for production of the nuclear weapon missile ASMP-A for the French military. The company was re-included in 2013 after production concluded. BAE Systems has since entered a contract with the US Air Force to maintain and upgrade the Minuteman III ICBM weapons system through 2021. This is considered nuclear weapons production as components must be updated and replaced on a rolling basis in order to keep a several-decades-old weapon system updated.
Through a joint venture, Fluor Corporation and Huntington Ingalls Industries produce the US military's only source of tritium gas, a central component in nuclear warheads.
- With weapons companies, we always have to assess companies' contributions and determine where to draw the line. With these companies, their association to nuclear weapons production cannot be explained away as something peripheral or of marginal significance for their customers. On the contrary, the companies tout their involvement as an important contribution to the nuclear weapons program, says Bergan.
Genting Berhad, Genting Plantations Berhad, IJM Corporation Berhad, and IJM Plantations Berhad
The companies are excluded for association to serious environmental damage in connection with their conversion of rainforest to oil palm plantations in Indonesia. KLP has considered exclusion based on information from the Council on Ethics.
Cemex SAB de CV was excluded in June 2015 for violation of fundamental ethical norms in connection with the extraction of non-renewable natural resources from occupied territory in the West Bank. This summer, Cemex confirmed that it has sold its ownership stake in the relevant quarry and is therefore no longer involved in stone extraction in the West Bank.
Wesfarmers was excluded in 2007 due to import of phosphate stone from Western Sahara, and therefore, violation of fundamental ethical norms. The company has, however, developed a technological method for processing phosphate such that Wesfarmers no longer needs or purchases phosphate from Western Sahara.
Power Asset Holdings and Turquoise Hill Resources are included as they have undergone significant strategic changes such that their share of revenues from coal-based activities was under 30 percent as of the most recent accounting year.
For more information, contact:
Jeanett Bergan, Head of Responsible Investments, KLP Kapitalforvaltning
92 03 85 89 or e-mail firstname.lastname@example.org
Heidi Finskas, Vice President Corporate Responsibility, KLP
45 88 04 60 or e-mail email@example.com
 Council on Ethics (17 August 2015), Recommendations from 2014 and 2015 to exclude IJM Corporation Berhad from the Government Pension Fund Global. URL: http://etikkradet.no/en/2015/08/17/recommendations-from-2014-and-2015-to-exclude-ijm-corporation-berhad-from-the-government-pension-fund-global/ and Council on Ethics (17 August 2015), Recommendations from 2014 and 2015 to exclude Genting Berhad from the Government Pension Fund Global. URL: http://etikkradet.no/en/?s=genting&lang=en.