Affects Seen on Firms in 27 Countries; IEEFA Urges Investors to Heed ‘a Clear Signal That These Companies Are Losing Favour’   

CLEVELAND, June 5, 2015 (IEEFA)The Institute for Energy Economics and Financial Analysis is warning investors that Norway’s move toward further divestment in its coal-related holdings may affect scores of companies globally.

In a commentary published on IEEFA’s web site, Tom Sanzillo, IEEFA’s director of finance, said that pension funds with similar holdings should follow Norway’s lead.

“It s a clear signal that these companies are losing favor with investors,” Sanzillo said. “Other institutional investors should take notice, too, including university endowment funds and corporate pension funds.”

Sanzillo said public and regulatory pressures on coal-burning utilities will continue to create investor risk.

“Pension funds, which have a fiduciary duty to make money, have no business owning any of these companies,” Sanzillo said. “The coal industry is deaf to investor inquiries, backward on innovation, arrogant in the face of public concerns about the environment and climate and unprepared to handle rising competition in the new-energy economy. The same can be said of its utility-industry allies.”

Sanzillo said many habit-driven fund managers would be reluctant to divest, but that energy markets are moving inexorably away from coal.

“These managers will argue that form trumps substance, and that the portfolio theory they follow requires an index-driven approach that cannot preclude the kinds of stocks Norway has eschewed,” Sanzillo said. “When a fund is losing money at catastrophic levels on an investment, and when there is no reasonable chance for a turnaround on that investment, action must be taken. Arguments to the contrary are largely academic. In the real world, investment funds are designed to make money, not adhere to outmoded investment designs.”

The $900 billion Norwegian Government Pension Fund (GPFG) has already divested from scores of coal-mining companies around the world, including Peabody Energy, Arch Coal, and Alpha Natural Resources.

Here is a partial country-by-country list of companies whose stock is owned by the GPFG and that stand to face divestment under the fund’s new criteria, which will require it to sell holdings in companies that rely on coal for more than 30 percent of their business operations or revenue:

Australia:
AGL Energy Ltd; Cockatoo Coal Ltd; Cokal Ltd; Origin Energy Ltd; Yancoal Australia Ltd

China:
China Power International Development Ltd; China Resources Power Holdings Co Ltd; China Shenhua Energy Co Ltd; Datang International Power Generation Co Ltd; GD Power Development Co Ltd; Guangdong Electric Power Development Co Ltd; Hidili Industry International Development Ltd; Huadian Fuxin Energy Corp Ltd; Huadian Power International Corp Ltd; Huaneng Power International Inc; Inner Mongolia Yitai Coal Co Ltd; SDIC Power Holdings Co Ltd.

Denmark:
Dong Energy

Germany:
E.ON; RWE

Hong Kong:

CLP Holdings Ltd; HK Electric Investments & HK Electric Investments Ltd; Mongolian Mining Corp; Shougang Fushan Resources Group Ltd

India:
Reliance Power Ltd

Italy:
Enel SpA

Japan:

Chugoku Electric Power Co Inc; The Electric Power Development Co; Ltd Hokuriku Electric Power Co; Kyushu Electric Power Co Inc; Nippon Coke & Engineering Co Ltd; Okinawa Electric Power Co Inc; The Shikoku Electric Power Co Inc; Tohoku Electric Power Co Inc.

Korea:
Korea Electric Power Corp.

Malaysia:
Tenaga Nasional Bhd; MMC Corp Bhd

Netherlands:
E.ON International Finance; EnBW International Finance; Enel Finance International NV; RWE Finance BV

Philippines:

Aboitiz Power Corp; DMCI Holdings Inc; Manila Electric Co; Semirara Mining Corp

Portugal:
EDP SA

Thailand: 
Electricity Generating PCL; Glow Energy PCL; Toyoc Thai Corp PCL; SSE PLC; Scottish Power

U.K.
Drax Group, New World Resources

Vietnam:
Pha Lai Thermal Power JSC

United States:

AES; Alabama Power; Alliant Energy Corp; Ameren Corp; Ameren Illinois Co; American Electric Power Co Inc; Appalachian Power Co.; Arizona Public Services Co.; CMS Energy Corp.; Dominion Resources; DTE Energy Co.; Duke Energy Carolinas; Duke Energy Corp; Duke Energy Florida; Duke Energy Ohio; Duke Energy Progress; Empire District Electric Co.; FirstEnergy Corp. FirstEnergy SoluTons Corp.; Georgia Power Co.; Great Plains Energy; Great River Energy; IDACORP; Indiana Michigan Power; Integrys Energy Group; Kansas City Power & Light; Midamerican Energy Co.; Midamerican Funding LLC; NRG Energy; Northern States Power; OGE Energy Corp.; Ohio Power Co.; Oeer Tail Corp.; PacifiCorp; Pinnacle West Capital Corp.; PPL Corp.; PPL Electric Utilities Corp; Southern Co.; Southwestern Electric Power Co.; Union Electric Co.; Vectren Corporation; Virginia Electric & Power Co.; Westar Energy; Wisconsin Energy Corp.; Wisconsin Electric Power Co.; Xcel Energy.

The list is based on research published by Greenpeace Norway. Here’s a complete list.

Director of Finance Tom Sanzillo is available for interview. Mr. Sanzillo has 30 years of experience in public and private finance, including as a first deputy comptroller of New York State, where he held oversight over a $156 billion pension fund and $200 billion in municipal bond programs.

About IEEFA: The Institute for Energy Economics and Financial Analysis (IEEFA) conducts research and analyses on financial and economic issues related to energy and the environment. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy and to reduce.