One of the world’s largest investment funds is dumping its shares in Duke Energy Corp. because it sees too much risk in what it called the largest USA electric company’s history of environmental damage.
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The decision by the world’s largest sovereign wealth fund was made by the executive board of Norway’s central bank, which oversees the $894B government fund, based on advice from the fund’s Council on Ethics. The fund always exits investments before it announces exclusions, Norges Bank spokesman Runar Malkenes said, declining to provide details on sale dates or prices.
A Duke Energy plant in Ashville, North Carolina.
At year-end of 2015, the fund held $304M worth of DUK shares, or 0.62%, as well as $77M worth of DUK corporate bonds. Get twice-daily updates on what the St. Louis business community is talking about.
It also referred to a $102 million criminal settlement of ash-related environmental violations that Duke reached with federal prosecutors last year, and to the separate $5.4 million settlement of a 15-year-old federal lawsuit over air pollution from its coal plants.
The ethics council said it had been talking with Duke about the ash basins and ultimately saw the long-lasting and extensive breaches of USA environmental legislation as a considerable risk factor that could lead to more discharges and penalties.
The fund’s Council on Ethics had recommended the exclusion of the companies in April of this year “due to the unacceptable risk of these companies being responsible for severe environmental damage”.
Norway also bans investments in companies that it deems a risk to human rights, corruption and other alleged ethical breaches.
The fund has holdings in around 9,000 companies, owning the equivalent of 1.3 percent of world stock market capitalisation.
Wal-Mart didn’t respond to the council’s requests at the time.
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Ahead of the divestment, Rio Tinto told the council that it maintained the highest environmental standards at all its operations.
