Kommunal Landspensjonskasse (KLP), the NOK589bn (€64.9bn) Norwegian public sector pension scheme, is sending a staff member to North Dakota in the US to assess the situation surrounding the building of an underground oil pipeline.
The construction plans have drawn a wave of protests from Native American tribes and others concerned about the environmental impact.
According to news reports, dozens of protesters have been injured after violent clashes with police on the proposed route of the Dakota Access, or Bakken, pipeline.
KLP has NOK423m invested in companies behind the pipeline project – Phillips 66, Enbridge, Energy Transfer Partners and Marathon Petroleum – in the form of both equities and fixed income.
Marathon Petroleum is not an owner of the Bakken pipeline system, but the company has an agreement in place to acquire a minority stake in the project.
Annie Bersagel, KLP’s in-house adviser on responsible investments, told IPE: “Actually being on the ground will help us get a better understanding of the situation, particularly with a case like this one, where there is such a groundswell of engagement, and help us sense what the sentiments are.”
Noting that the protests against the pipeline had drawn the attention of people around the world, KLP said the project had been temporarily halted by the US government and that the future of it had not yet been decided.
“KLP is collecting information and has established a dialogue with a number of companies with interests in the project,” it said.
Bersagel said KLP did not have any specific conclusions yet in terms of what the companies behind the project should do but said there were three different aspects to the problems.
“There are the allegations related to the environment, and the risk of contamination of the tribes’ drinking water; there are the rights of indigenous peoples – and we want to find out what the procedure has been and is in terms of the companies’ consultation with the tribes in the past and now as a sovereign government; and lastly, there is the issue of the use of violence against protesters, and whether this constitutes a violation of human rights,” she said.
The pipeline is designed to stretch 1,172 miles to transfer oil from the Bakken oil fields in northwest North Dakota to an oil tank farm near Patoka, Illinois.
It will cross the states of South Dakota and Iowa.
It is not the first time KLP has made a field trip abroad to assess its investments and their impact in ESG terms.
Bersagel visited Myanmar for this purpose two years ago and in September this year, while colleagues of hers were in Indonesia investigating palm oil plantations, she said.
Fiona Reynolds, managing director of the UN-supported PRI (Principles for Responsible Investment), told IPE KLP’s action in making the trip highlighted the sharp focus Nordic pension funds tended to have on sustainable investment.
“The Nordic pension funds have been at the forefront of the movement towards investing with respect for environment, social and corporate governance matters for some time, and it is very much embedded into their mentality,” she said.
KLP, a signatory to the PRI, probably wanted to be aware in detail of how the pipeline problem was being managed on the ground, she said.
“They will probably have to answer many questions about it from their beneficiaries,” she added.