Two South Korean pension funds with US$22bn AuM announce an end to coal finance for the first time in Korean history, as delegations and scientists from around the world gather for the IPCC Summit in Incheon.
The Teachers’ Pension and Government Employees Pension System (GEPS) with a total assets of US$22 billion assets under management made a commitment to stop investing in new coal projects from now on, during a news conference at the Korea Press Foundation in downtown Seoul, Thursday.
Their declaration on phasing-out coal financing states, “As the first Korean financial institutions to join this initiative, we are now on a new journey towards sustainable investment for a better future. We believe coal phase-outs and renewable energy are the last move towards a sustainable future. It is also our responsibility to meet the humanity’s continuous endeavour to keep global warming under 1.5°C.”
The announcement comes as the IPCC – the scientific UN body tasked with providing evidence on climate change – is meeting in Incheon, to approve a landmark report with recommendations on how to limit the impacts of global warming. Investments in fossil fuels are increasingly viewed as a risk, with likelihood of collapsing in the future as assets are stranded.
The Teachers’ Pension, which has invested in renewable funds since 2015, plans to increase the portion of sustainability investment, as they establish a new long-term portfolio. The amount of sustainability investment stood at US$90 million last year.
Joong Heun Lee, CEO of the Teachers’ Pension said, “We will fulfill our responsibility in tackling climate change and air pollution problems as a public financier, by expanding socially responsible investment, such as exploring investment opportunities in renewable energy.”
As the sole South Korean member of Carbon Disclosure Project among Korean pension funds, the GEPS has been continuously increasing socially responsible investment, based on ESG factors, and this will be soon applied to overseas investment.
Nam Joon Chung, Chairman and CEO of the GEPS said, “After our declaration, we will do our best to fulfill our environmental and social responsibility as a public financier and also encourage domestic and international governments to reduce greenhouse gas emissions.”
The declaration is
Jong-O Lee, director of KoSIF, who has led a campaign for financiers to exit coal, said, “Seizing this important moment, we will keep engaging with financial institutions, encouraging them to join the move towards an exit from coal finance. Also, we will lay the groundwork for them to join a coalition to strengthen the drive for coal phase-outs.”
Although the Korean financial institutions’ announcement of their policies on coal financing is the first of its kind, this will build on other major global players who have joined the move to end coal finance.
Most recently, Standard Chartered has published their new energy policy, saying they will not directly finance any new coal-fired power plant projects, including expansions, in any location.
Also, Japanese companies have led the global trend in Asia. Marubeni, a major Japanese integrated trading and investment business conglomerate, said it will withdraw from the development of new coal-fired power plants.
Among Japanese financial institutions this year, Dai-Ichi Life Insurance Co. said it won’t provide financing for overseas coal projects, following Nippon Life Insurance Co. which said the company is planning to end new loans and investment in ventures that contribute to climate change.
Contact info for interviews:
* Dong-Yup Shin, Manager of Alternative Investment Team, Teachers’ Pension
(82) 02-769-4156 / [email protected]
* Chang-Seok Han, Head of Investment Strategy Team, GEPS
(82) 02-560-2178 / [email protected]
For more questions:
* Jong-o Lee, director (KoSIF)
(82) 010 4276-6808 / [email protected]
* Lynn Kim, Global Strategic Communications Council (GSCC)
(82) 010-7913-7903 / [email protected]
* Taejong Kim, Global Strategic Communications Council (GSCC)
(82) 010-9143-6595 / [email protected]
Korea Sustainability Investing Forum (KoSIF) were founded in 2007 with the mission of promoting sustainable finance in South Korea. They have mainly focused on two areas; 1) to make investors including pension funds to consider ESG factors in their investment decision making process and 2) to make companies disclose their ESG information. Also, KoSIF has provided policy advice and the latest analysis on sustainable finance to policy makers, and recently given legislative supports for the amendment of “National Pension Act,” “Financial Investment Services and Capital Markets Act,” and “Korea Investment Corporation Act.” From 2008, KoSIF has run CDP program (formerly Carbon Disclosure Project) as a Korean partner of CDP.
About the IPCC Special Report on 1.5:
The Intergovernmental Panel on Climate Change (IPCC) is meeting in Incheon, South Korea from 1-5 October, to approve the text of the 1.5 Special Report. The IPCC was invited by the UNFCCC to write a report on how the world can limit global warming to 1.5°C. This report is one of the first deliverables from the Paris Agreement. Its recommendations will likely be far-reaching and inform this year’s COP24 climate negotiations in Katowice, Poland. The report will be the evidence base for the next five years, which is the window where governments are expected to step up their targets in their climate pledges (NDCs) ahead of the global stocktake in 2023.