Norwegian Pension Fund ditches Indian coal sector investments: Greenpeace

The fund has also sold shares in US and European companies similarly exposed to the coal sector. The move comes as the global coal sector continues to struggle due to a combination of macro economic trends and growing regulatory scrutiny on environmental and social grounds, Greennpreace India said in a statement.

In its 2015 Responsible Investment report, released on March 13,  the Fund states that the sell offs were in the financial interests of the fund as “Companies that rely on value chains with particularly high greenhouse gas emissions may be exposed to risk from regulatory or other changes, leading to a fall in demand.” Coal mining companies in both the US and India came in for specific attention due to the “substantial local environmental impact” of coal production.

Among the Indian companies it has divested from are Coal India, NTPC, Adani Power, Tata Power, Jindal Steel and Power, JSW Energy, Jaiprakash Power Ventures, GVK Power & infrastructure, GMR Infrastructure, Lanco Infratech, CESC, Monnet Ispat & Energy, Reliance Infrastructure and Torrent Power. The total value of the holdings sold is over 622 crores (US $98 million).

As a matter of course, the fund does not state when the holdings were sold, but the list is effective as of December 31, 2014.

All the above companies were in the fund’s portfolio a year prior to this date, meaning the sell off happened at some point in 2014. Strangely, the fund still holds shares in Reliance Power, a prominent coal player.

In 2013, the fund had 82 crores ($13 million) invested in Coal India and 325 cores ($51 million) in NTPC.

Responding to the news, Greenpeace campaigner Ashish Fernandes said, “The fact that the world’s biggest sovereign wealth fund has decided that coal is a risky investment in India should set alarm bells ringing with shareholders and investors, domestic and foreign. Coal has been facing global headwinds for years, and it’s now clear that India is no exception. Rising costs, corruption and community opposition to mines and power plants are ensuring that coal is losing out to renewables as the energy source of the future.”

Coal’s woes have coincided with an unprecedented fall in the price of renewable energy, in particular solar, leading financial institutions such as Deutsche Bank and HSBC to predict that coal will soon be more expensive than renewables in all major markets, including India.

Bloomberg New Energy Finance has estimated that investment in the Indian clean energy sector will breach the $10 billion mark in 2015, up from $7.9 billion in 2014.

The GPF’s decision to sharply reduce its holdings in coal has broader ramifications, as many global pension funds use the GPF’s portfolio as a guide to structure their own investments, Greenpeace stated.