Last modified 01.12.2014

31 new companies excluded

Four new companies are excluded from KLP’s investment portfolio with effect from 1 December 2014. In addition, KLP is excluding 27 coal companies. On the other hand, Yahoo’s exclusion has now been rescinded.

KLP has carried out its twice-yearly review of the companies that it can invest in, according to its guidelines for responsible investment. As a result, four new companies are excluded with effect from 1 December: POSCO, Daewoo International Corporation, Olam International, and Agrium.

 

POSCO, Daewoo International Corporation and Olam International are excluded because they buy cotton from Uzbekistan, which represents an unacceptable risk of KLP contributing to violations of both human rights and labor rights. Use of child labor to harvest cotton has long been widespread in Uzbekistan. In response to international pressure, the country has reduced the scale of child labor, but has done so by increasing the use of adult forced labour. To avoid the risk of contributing to such abuses, many of the world’s largest cotton producers and traders have declared that they will not buy Uzbek cotton. Although both POSCO, through its subsidiary Daewoo International, and Olam have confirmed to KLP that they are aware of this risk, they have given no indication that they will change their procurement practices.

 

“These companies should introduce systems designed to uncover and prevent child and forced labour within their supply chains. Where violations of human and labour rights have been identified, KLP expects companies to respond by implementing reasonable measures to stop such abuses from continuing,” says Jeanett Bergan, head of responsible investment at KLP Kapitalforvaltning.

 

KLP is also excluding Agrium, whose purchase of phosphates from Western Sahara via a long-term contract with the state-owned Moroccan company Office Chérifien des Phosphates (OCP), is deemed to represent an unacceptable risk of contributing to violations of basic ethical norms, and therefore contravenes KLP’s guidelines for responsible investment. This assessment is in keeping with KLP’s previous practice.

 

27 coal companies excluded

On 19 November this year, KLP announced plans to invest an additional NOK 500 million in the development of new renewable energy capacity. At the same time, KLP is pulling out of companies that derive a substantial proportion of their revenues from coal (see the list below). KLPs first evaluation of coal holdings resulted in divestment of equities and bonds in 27 companies for a total amount of 386 million Norwegian kroner.

 

“This is the first step in an effort to purge our investments of coal. We have attempted to establish a sensible balance between investments in new renewable energy production, divestment of coal companies and the exertion of shareholder influence. The next step now is to press companies to move in a more climate-friendly direction and reduce their carbon emissions. Companies with substantial coal-based operations which prove unwilling or unable to change, will run the risk of being excluded,” says Jeanett Bergan.  

 

Yahoo returns to favour

Yahoo! Inc. (Yahoo) was excluded in December 2005 due to a violation of the human rights stipulation in KLP’s guidelines for responsible investments.

 

Yahoo had handed user information over to the Chinese authorities, which led to a Chinese journalist being sentenced to 10 years in prison.

 

“Yahoo admits that the incident which formed the original grounds for exclusion was worthy of criticism, and has introduced a number of measures to strengthen user privacy. KLP recommends continuing the dialogue regarding Yahoo’s respect for freedom of expression, but feels there are no longer any grounds for the company’s exclusion,” says Ms. Bergan.

 

KLP has decided to exclude the following 27 coal companies:

Adaro Energy Tbk PT
Ameren Corp
American Electric Power Co. Inc
Banpu Public Comp. Ltd
China Coal Energy Comp. Ltd
China Resources Power Holdings Comp. Ltd
China Shenhua Energy Comp.
CLP Holdings Ltd
Coal India Ltd
CONSOL Energy Inc
Datang International Power Generation Comp. Ltd
DMCI Holdings Inc
E-CL SA
Exxaro Resources Ltd
Hokuriku Electric Power Comp.
Indo Tambangrava Megah Tbk PT
Inner Mongolia Yitai Coal Co. Ltd
NTPC Ltd
Peabody Energy Corp.
Power Assets Holdings Ltd
Reliance Power Ltd
Shougang Fushan Resources Group Ltd
Tambang Batubara Bukit Asam Tbk PT
Tata Power Co. Ltd
TransAlta Corp
Turquoise Hill Resources Ltd
Yanzhou Coal Mining Comp. Ltd

 

Facts
KLP has now excluded 99 companies from its investment portfolio for ethics violations. 9 companies can be tied to human rights abuses and 3 to violations of individuals’ rights in war and conflict. 7 companies have been excluded for violating other fundamental ethical norms, 1 for violating labor rights and 15 as a result of severe environmental damage. In addition, 19 excluded companies can be linked to the production of controversial weapons, 20 to the production of tobacco and 27 to coal mining or coal-fired electricity generation. To date, no companies have been excluded on the grounds of corruption.

 

For more information, please contact:

Jeanett Bergan, Head of Responsible Investment at KLP

Tel: +47 9203 8589 or email: jeanett.bergan@klp.no