By Kim Se-jeong
A major investor decided to divest from the Korea Electric Power Corporation (KEPCO) because of its business activities with coal.
Norges Bank Investment Management, the manager of Norway’s pension fund and the world’s largest sovereign wealth fund, had been investing in the company for several years. Last year’s investment was $23 million.
The decision came after the bank’s analysis of businesses they invested in by the coal criterion.
KEPCO is Korea’s largest utility company and has several subsidiaries producing electricity using coal. The company said it has no comment.
KEPCO was among 10 companies the bank dumped. The others are Evena from Brazil, Great River Energy and Otter Trail Corporations from the U.S., CEZ from Czech Republic, HK Electronic Investments & HK Electric Investments from Hong Kong, Huadian Energy and SDIC Power Holdings from China, PGE Polska Grupa Energetyczna from Poland and Malakoff Corp from Malaysia.
The decision may not be a big blow to Korea’s largest utility company because the amount of the investment is relatively small but environmentalists said the decision carries great significance.
“The decision demonstrates that coal not only poses an environmental threat but is becoming a less attractive business,” Greenpeace Korea activist Son Min-woo said. “Coal is the main source of electricity in Korea, and KEPCO which is a public company is pushing to build eight new coal power plants. This is the time for the government to reconsider using coal to generate power. Korea needs to search for a new source of energy that is emission-free.”
With the consequences of climate change being felt so strongly, environmentalists predict fossil fuel businesses will become less attractive.
The Norwegian fund’s move sets an example for other businesses around the world. The firm reviews companies periodically by categories of environment, corporate governance and others.
The bank also cut its investment in other Korean companies in the past.
In 2015, the pension fund manager excluded POSCO and Daewoo International from the investment list, citing environmental damage the two companies’ business practices caused.
In the same year, POSCO also received a complaint from an Australian lawmaker who claimed the coal export terminal the company was building at Abbot Point and a railway connection posed environmental threats.
In a letter sent to the Export-Import Bank of Korea, Larissa Waters, a senator from Queensland, warned against the bank’s plan to finance the project, saying it was inconsistent with Korea’s commitment to fighting climate change.
Korea relies heavily on fossil fuels and a lot of the imported fossil fuel is used to make power. Coal is mostly from Australia, China and Indonesia and accounts for almost 40 percent of the country’s electricity.
In 2015, Korea vowed to reduce its greenhouse gas emissions by 37 percent by 2030 from the projected emissions levels.