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Norway’s KLP excludes Japan’s TEPCO over Fukushima environmental risks

Car giant Toyota reinstated to portfolio

KLP, the mutually owned Norwegian insurance group, has excluded Tokyo Electric Power Company (TEPCO), the operator of the Fukushima nuclear power plant stricken by an earthquake and tsunami in 2011, from its investments.

KLP says that, given the risks of further discharges of radioactive material from the plant, the investments “represent a potential for complicity in severe environmental damage” which breach its guidelines on responsible investment. Thus, KLP exited its NOK8.2m (€1m) stake in TEPCO as of the start of December.

Other investors, notably the New Zealand Superannuation Fund, have also exited TEPCO for similar reasons.

The latest decision is based on guidelines from the UN Global Compact, the OECD’s Guidelines for Multinational Enterprises and the Council on Ethics for Norway’s Government Pension Fund. And it has been based too on reports from the company, the International Atomic Energy Agency (IAEA) and Japanese authorities, with recommendations from advisory firms GES Investment Services and Institutional Shareholder Services.

KLP also consulted specialists from the Norwegian Radiation Protection Authority and the environmental foundation Bellona.KLP has backed proposals to enhance the company’s corporate governance at its recent annual meetings. But at the two most recent AGMs it voted against the company president, due to a lack of confidence in its management of environmental and social risk. KLP also voted against several board members at this year’s AGM over their lack of independence.

While acknowledging TEPCO’s efforts after the disaster, KLP says that “in the overall picture we see signs of systematic weaknesses” in TEPCO’s assessment of the gravity of the situation.

“This has been decisive for KLP’s decision,” the group, which has total assets of NOK375bn, says in a 13-page analysis.

Alongside TEPCO, six other companies have been excluded by KLP. They are Malaysian timber firms WTK and Ta Ann, China-based Zijin Mining, Peruvian miner Volcan, India-based fertilizer group Zuari and iron ore group Sesa Sterlite. KLP is following on from the Norwegian government fund’s exclusions of the firms in October.

At the same time, KLP has decided to rescind the exclusion of car giant Toyota, which had been excluded because of associations of international labour rights violations in the Philippines. The latest decisions mean that KLP currently excludes 69 companies.