Dutch pension provider, APG, has sold its stake in South Korean utility company, Korea Electric Power Corporation (Kepco), after it continued to plan for new coal-fired power plants in Indonesia and Vietnam despite “strong objections” from the provider.

APG emphasised that it had strongly opposed the plan, with APG Asset Management sustainability specialist, Yoo-Kyung Park, describing Kepco's refusal to cancel the expansion plans as “disappointing".

She stated: "The decision on the new coal-fired power plants was a litmus test for the company’s commitment to the Paris Agreement and join global efforts to combat climate change.

“The construction of these coal-fired power plants deepens the climate crisis and worsens the company's profitability in the long run."

Furthermore, she emphasised that the provider had "pulled out all the stops" to change the company's plans, including writing letters to management, increasing pressure in the media, and working together with civil organisations.

“Because 51 per cent of KEPCO is owned by the Korean government, we also liaised with other investors to approach the government on its responsibility," she added. "Unfortunately, that didn’t work out."

Indeed, whilst investors, including APG, have previously succeeded in persuading large financial institutions in South Korea to stop financing new coal-fired power plants and to sharpen their climate ambitions, Park emphasised that there is more to be done in this area.

"South Korea is a signatory to the Paris Climate Agreement. But despite many promises, the country is still one of world’s largest carbon emitters," she explained.

"Through pressure on the financiers of coal-fired power plants, we are trying to change that."

Including this latest divestment, APG has sold its stake in eight companies in 2020 due to plans to expand coal-fired power stations, with the total annual CO2 emissions of these companies, all based in Asia, equal to 624, tonnes.

APG's largest client, Dutch civil service pension fund, ABP, also recently confirmed its divestment, which will contribute to the funds broader goal of a climate neutral portfolio by 2050, in line with the Paris Climate Agreement.

The plans will also support APG’s other asset management clients, bpfBOUW, SPW and PPF APG, with their own climate targets, which includes a 40 per cent reduction of their portfolios’ carbon footprint by 2025, compared to 2015.

Share Story: