Norway’s sovereign wealth fund will no longer invest in US energy company Duke Energy and its subsidiaries due the risk of these companies causing environmental damage and breaching environmental legislation.
The decision was taken by Norges Bank Investment Management (NBIM), which runs the investments of the Government Pension Fund Global (GPFG), after a recommendation from its Council on Ethics, appointed by the Ministry of Finance.
The council made the recommendation “due to the unacceptable risk of these companies being responsible for severe environmental damage”.
“For many years,” it said, “these companies have, among other things, repeatedly discharged environmentally harmful substances from a large number of ash basins at coal-fired power plants in North Carolina.”
It noted that several court rulings had ordered the companies to remove or seal the ash basins, and that the council believed these measures would not be fully implemented for another 10-15 years.
“The council also perceives the long-lasting and extensive breaches of the environmental legislation to be a considerable risk factor,” it added.
Norges said it decided to exclude Duke Energy after concluding that other measures, such as the exercise of ownership rights, were “not appropriate to use in this case”.
NGOs had identified Duke Energy as one of the companies they thought GPFG would have to divest from in connection with a 2015 parliamentary vote on the oil fund’s stocks in coal companies.
However, the company was not one of those NBIM excluded from the oil fund in May 2016 on a new coal criterion.
As at 31 December 2015, the fund had equity holdings in Duke Energy Corp worth $304m (€270m), equivalent to an ownership stake of 0.62%.
It also had fixed income holdings in Duke Energy companies.
Duke Energy is one of the largest electric power holding companies in the US.
Based in North Carolina, it is listed on the New York Stock Exchange.