​Storebrand aims to strangle coal industry related investments plans

Leading up to the COP24, Storebrand Asset Management, the largest Norwegian private asset manager announces further bold steps to stop future investments in the coal related industries that will lead up to a full divestment from coal in 2026. The new ambition is designed to induce other financial institutions to follow suit.The strategy is in line with the recommendation of the last special report from the IPPC and enables pension funds and banks to exit the financial death spiral of the coal industry.

Leading up to the COP24, Storebrand Asset Management, the largest Norwegian private asset manager announces further bold steps to stop future investments in the coal related industries that will lead up to a full divestment from coal in 2026. The new ambition is designed to induce other financial institutions to follow suit. The strategy is in line with the recommendation of the last special report from the IPPC and enables pension funds and banks to exit the financial death spiral of the coal industry.

The world’s climate leaders will meet in Katowice, Poland for the COP24 (Conference of the Parties) next week to discuss further plans to reinforce the Paris agreement from 2015 to meet the two-degree temperature goal and even the 1,5-degree goal outlined in the IPCC (Intergovernmental Panel on Climate Change) special report last month. Leading up to the meeting, Storebrand, Norway’s largest private asset manager (US$85 billion AuM) has developed tightened criteria that 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.

Beginning in 2013 Storebrand enforced strict 30% coal criteria to their investment universe, criteria that leading asset managers have adopted, including the US$ 1 trillion AuM Norwegian Government Pension fund, the largest sovereign fund in the world.

Since 2013, 64 coal related companies have been excluded from Storebrand’s investment universe. Another five companies will be followed closely subject to the new 2020 20% criteria.

Jan Erik Saugestad, CEO of Storebrand Asset Management 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 U.S.»

«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.»