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The report "Dirty & Dangerous" takes a deep look into the coal portfolio of the world's largest sovereign wealth fund, the Norwegian Government Pension Fund Global (GPF). The report launches at a public event in the Norwegian Parliament today (10 am. CET) and comes in the midst of a political debate in Norway around a possible divestment of the Government Pension Fund (GPF) from the coal sector.
The report reveals that the Pension Fund's holdings in the coal industry are much larger than previously acknowledged. According to the NGOs' research, the GPF holds assets of over NOK 82.2 billion (€ 9.7 billion) in the coal sector, of which NOK 68.7 billion are in the form of shares and NOK 13.5 billion are held in bonds. In January of this year, the Pension Fund's manager, Norges Bank Investment Management (NBIM), announced that the GPF's ownership in coal miners amounts to only NOK 2.5 billion (€ 296 million).
"This is a gross understatement," says Heffa Schuecking, director of the German NGO Urgewald and author of the report. According to Schuecking, the way NBIM defines a coal company is so narrow that it leaves out most of the coal producers in its portfolio. The report identifies 158 companies from the coal industry in the GPF's 2013 portfolio. "If you add up the annual production of these companies, they amount to 3.3 billion tons of coal - that is 42% of global coal production. While the Norwegian government is doing its best to ensure that the 2015 Paris Climate Summit results in effective international action, its sovereign wealth fund is helping to bury any chance of climate stability beneath a mountain of coal", says Schuecking. "We were not only shocked by how much, but also by what we found," says Truls Gulowsen of Greenpeace Norway.
Greenpeace East Asia had recently warned that China has 50 coal-to-gas projects in the pipeline, which would produce an estimated 1.1 billion tons of carbon dioxide per year, an amount equal to about 1/8th of China's current CO2 emissions. "We found that the Pension Fund has investments of NOK 4.6 billion (€ 544 million) in the companies behind these projects. The lifecycle carbon emissions of coal-gasification are much higher than simply burning the coal. These investments have to go," says Gulowsen.
"Coal is always controversial," says Arild Hermstad of the Future in our Hands, "but we found many extremely dirty investments that stand out even in an already bad sector. NBIM doesn't seem to be discriminating against companies with bad mining practices, immense social impacts or routine violations of environmental laws." One of the best examples is the GPF's recent investment of over NOK 107 million (€ 13 million) in Coal India Limited, the world's largest coal producer. "I was shocked to see that the Norwegian Government Pension Fund purchased shares just last year," says Ashish Fernandes of Greenpeace India. "This is irreconcilable with the Pension Fund's ethical guidelines." According to Fernandes, the company has been charged with violating environmental laws, and is responsible for the forced displacement of indigenous forest dwellers as well as the destruction of key habitat for the Bengal tiger and Asian elephant. "This company's entire business model is based on destroying forests, irrespective of the communities and biodiversity that depend on them," he adds.
"Dirty & Dangerous" is the most comprehensive independent study that has ever been done on the Pension Fund's coal investments. It not only looks into the GPF's 2013 portfolio, but also examines the holdings in 2011 and 2012. The report challenges NBIM's claim that the Pension Fund's coal investments have been halved over the past 2 years. The report finds that the GPF's coal investments have increased by 13% since 2011. "The increase is especially pronounced for coal-based utilities," says Heffa Schuecking and criticizes that NBIM does not seem to be monitoring or reporting these as coal investments. "This seems absurd in view of the fact that coal-fired power plants are the biggest source of man-made CO2 emissions. It is time to move out of investments that will become tomorrow's emissions."
Just last week KLP, a Norwegian mutual insurance company managing assets of NOK 470 billion (€ 56 billion), announced its divestment from major coal- based utilities and mining companies. Norway's Storebrand, a pension fund managing assets of NOK 502 billion (€ 59 billion) had already begun divesting from major coal companies last year. "Now that Norway's two biggest private pension funds have moved away from coal, it is really time for the Government Pension Fund to follow suit," says Truls Gulowsen.
"The GPF is among the top ten investors in the global coal industry," says Arild Hermstad. "It is time to change course and do what is right, both for future Norwegian generations as well as for the world." "Dirty & Dangerous" makes concrete and workable suggestions for a meaningful divestment from coal for the GPF as well as other investors. The report was published by the German NGO Urgewald, Greenpeace Norway and the Future in our Hands.
The report itself as well as the research data it is based on can be downloaded from www.urgewald.org