Storebrand AM moves to tighten coal holdings

Jonathan Boyd
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Storebrand AM moves to tighten coal holdings

Norwegian manager Storebrand Asset Management has announced that it is moving ahead with plans to reduce all exposure to coal in line with climate change requirements outlined in October 2018 by the Intergovernmental Panel on Climate Change (IPCC).

Commenting ahead of the Conference of the Parties 24 (COP24) taking place next week in Poland, the manager noted that the tightened criteria “will lead to the full exclusion of companies related to coal, coal mining and coal power”.

“The IPCC has analysed various pathways, all of which require a near total reduction in coal use for electricity generation by 2050, with reductions of reduction of approximately two thirds by 2030. The new criteria are in line with these recommendations.”

“The exit strategy involves a reduction of this threshold by 5 % every second year starting from 2018 (25% in 2018, 20 % in 2020 and so on).”

“The ambition is also to collaborate with other investors. Storebrand expects that a gradual transition allows more investors to join the movement and sends a stronger message and warning to the coal industry around the world.”

Storebrand AM introduced a 30% coal limit to investments in 2013. Since 2013, some 54 coal related companies have been excluded from its investment universe. Another five will be subject to strict surveillance in respect of the 20% target by 2020.

Jan Erik Saugestad (pictured), CEO of Storebrand AM, said: “We cannot allow companies, or even presidents, to side-track or derail concrete actions in line with the last IPCC special report. We urge other investors and pension funds to end their complacency with regards to the walking dead and excessively polluting coal industry. We will work tirelessly with the companies and financial stakeholders in the European countries to follow suit on this exit strategy.”

“With this new coal screen, five new companies be followed closely and are highly vulnerable to divestment before 2020. We could have accelerated our coal investment phase-out, but we are moving at this pace to bring other large investors along with us. Many coal related companies, that we have exited, still remain in large investor portfolios. We expect coal companies to face an investor exodus as soon as they seek to extend the lifetime of their coal plants and mines despite grave climate risk. In this day and age, power companies can no longer get away with saying, we’re still in coal but look at what we’re doing in renewables. They need an ambition to exit coal as well.”

“Roughly half of the investments in global stock exchanges are made up by pension funds. Improved investment criteria like the Storebrand divestment plan will have a striking effect on coal investments, underlining the climate risks faced by coal intensive economies.”

“Our new coal divestment plan shows a clear and comprehensive path towards an effective divestment from coal investments by 2026. For many coal-exposed companies this means that there will be absolutely no room for further expansion or the reliance of coal for energy security in the near future. We are approaching the end of the road for old King Coal.”

“As we encourage other investors to follow suit, there can be no room for coal screen policies that does not exclude coal intensive energy companies world-wide. The burning of coal in Asia is not less harmful to the climate than if it the coal is burned in Europe or in the US.”

“In Norway, a pivotal debate is conducted on the future of the fossil investments of the Government Pension Fund. From a financial perspective, it would be a sound advice to pull out, to reduce the total exposure the country has to the oil and gas industry. As for the Government Pension Fund’s existing coal screen, it will in our opinion not be consistent with the recommendations from the IPPC if the screen is not tightened in the very near future.”

 

Jonathan Boyd
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Jonathan Boyd

Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope.