Events Recap
Events Recap
Three years on, NPS coal exit pledge remains empty words — groups urge 22nd National Assembly to act
English translation of KoSIF’s Korean content — the Korean version is the authoritative source.
Three years on, NPS coal exit pledge remains empty words — groups urge
22nd National Assembly to act
Three years on, NPS coal exit pledge remains empty words — groups urge 22nd National Assembly to act
Climate-minded members-elect of Korea's incoming 22nd National
Assembly joined non-profit groups including Solutions for Our Climate (SFOC),
BigWave and the Korea Sustainability Investing Forum (KoSIF) on 28 May to mark
the third anniversary of the National Pension Service's (NPS) coal
divestment declaration, condemning the NPS and the Ministry of Health and
Welfare for expanding coal investment behind a pledge that has never gone
beyond words. At a press conference at the National Assembly in Yeouido, Seoul,
the groups — joined by Rep. Jeoung-ae Han (Democratic Party of Korea),
re-elected to the 22nd National Assembly, and member-elect Wangjin Seo
(Rebuilding Korea Party) — called on the incoming legislature to take an
active role in pushing the NPS to change course.
As the world's third-largest pension fund, the NPS wields enormous
influence over finance and the wider economy through its investment policy. On
28 May 2021, the NPS convened its Fund Management Committee and issued a
"coal divestment declaration," adopting a strategy to restrict
investment in coal mining and coal-fired power on the grounds that "the
spread of COVID-19, a novel infectious disease, is a reminder of the severity
of climate change and the importance of ESG (environmental, social and
governance) investment principles." Three years on, however, the NPS
has yet to disclose the criteria by which it will restrict such investment, and
its portfolio has shown no corresponding change. It has also withheld the
findings of a study it commissioned on coal investment restriction criteria,
despite having received the final report. At the press conference —
co-hosted by the Korea Federation for Environmental Movements (KFEM) Gyeongnam,
Solutions for Our Climate, the youth climate group BigWave, KFEM Incheon, KFEM
Chungnam, the Korea Sustainability Investing Forum, KFEM and 60+ Climate Action
— Jongoh Lee, CIO of KoSIF, said: "Investment in coal power is
financially risky, with a high probability of ending up as a stranded asset;
environmentally destructive, accelerating the climate crisis through massive
greenhouse gas emissions; and morally indefensible, threatening health and
lives as a leading source of particulate matter." He added that the NPS's
current approach of "prolonging such investment with the public's
retirement savings is irresponsible and financially foolish."
The problem is all the more serious because the NPS's continued coal
investment threatens public health as well as the climate. Research published
last year by the Centre for Research on Energy and Clean Air (CREA), a
Finland-based air quality research organization, and Solutions for Our Climate
assessed the health impacts of the coal power investments the NPS maintained in
2021 — the year of its coal divestment declaration — and 2022, and linked them
to 1,968 premature deaths nationwide. "Air pollutants from coal plants,
such as sulfur dioxide, nitrogen oxides and fine particulate matter (PM2.5),
not only raise premature mortality but also cause childhood asthma and preterm
births," said Chunghyun Lee, an activist with KFEM Incheon, a city
that hosts six coal-fired power plants. "The NPS claims on the one hand
to promote people's livelihoods and welfare, yet on the other it is
accelerating the climate crisis and endangering public health. That is a
contradiction."
The NPS has even been accused of deception for expanding its coal
investment after making the declaration. According
to the 2022 Global Coal Exit List, published jointly by 25 NGOs including the
German non-profit Urgewald, the NPS's coal investment actually rose by roughly
KRW 1.67 trillion (USD 1.4 billion) in 2022 compared with 2021, the year of the
declaration. A study by Solutions for Our Climate also found that the amount
the NPS had invested in bonds issued by Korea Electric Power Corporation
(KEPCO) — the country's main coal power operator — and its generation
subsidiaries rose 85.4%, from KRW 10.24 trillion (approx. USD 7.9 billion) in
2018 to KRW 18.98 trillion (approx. USD 14.6 billion) as of May 2023.
Older and younger campaigners spoke with one voice at the press
conference. "Older people are the largest contributors to, and
beneficiaries of, the National Pension," said Jihyun Na, Co-Chair of 60+
Climate Action, a climate group of older citizens. "Coal investment, which
is making an already severe climate crisis even worse, must stop
immediately." Min Kim, who heads the youth climate group BigWave, said:
"After graduating and starting work, I saw National Pension contributions
deducted from my salary every month, but at first I paid little attention. I
thought of it simply as money I was automatically signed up to pay and would
get back when I retired." Kim added: "If things carry on as they are,
by the time I am old enough to draw my pension we will have failed to reach
carbon neutrality by 2050, and the global average temperature will have risen
by close to 3°C. As the pension reform debate turns to fund management, the
National Assembly must play an active role in confronting the seriousness of
coal investment and resolving it."
The non-profit organizations and members-elect behind the campaign
said: "Compared with the world's five largest pension funds, the NPS
has been extremely slow to respond to climate risk. Starting with delivering on
its coal exit, the NPS has a duty to set a target of net zero (zero financed
emissions) by 2040 in pursuit of carbon neutrality in finance, and to draw up
an action plan to match." They set out the following demands to the
NPS and the 22nd National Assembly:
1. The Ministry of
Health and Welfare and the NPS must adopt, by the end of this year, coal
investment restriction criteria that bar investment in companies deriving 30%
or more of their revenue from coal power.
2. The Ministry of
Health and Welfare and the NPS must declare a 2040 net zero target for financed
emissions and establish a concrete implementation plan.
Press conference statement
Three years after the NPS coal divestment declaration:
the NPS must act, and the National Assembly must play its part.
0.05°C. That is all that now separates us from the 1.5°C limit.
Despite efforts to hold global warming to 1.5°C, the global average temperature
in 2023 was already 1.45°C above pre-industrial levels. We are running out of
time. Last year, every major climate indicator set a new record. The climate
crisis has sent the prices of produce such as green onions and apples soaring,
squeezing household budgets, while floods, wildfires and other climate
disasters are putting our lives at risk.
Three years. That is how much time has been squandered since the NPS
declared coal divestment. It commissioned research on coal investment
restriction criteria and received the final report, but at some point the issue
quietly dropped off the agenda. Not even the meeting minutes have been
released. By meeting every demand with silence, the NPS has forfeited both
trust and transparency.
KRW 13 trillion (approx. USD 10 billion). That is the amount by
which the NPS has increased — not reduced — its investment in coal-related
companies despite its divestment declaration. And coal is no longer even
profitable. As coal's share of the power mix steadily shrinks, plants are being
shut down or run at lower utilization rates. Even the 1 percentage point
increase in fund returns discussed in the pension reform debate cannot be
achieved without shedding stranded assets. Holding on to them will only hasten
the fund's depletion.
Compared with the world's five largest pension funds, the NPS has
been extremely slow to respond to climate risk. Starting with delivering on its
coal exit, the NPS has a duty to set a 2040 net zero target in pursuit of
carbon neutrality in finance, and to draw up an action plan to match. That is
why the 22nd National Assembly, which opens in two days, has such a crucial
role to play. We have no more time to waste. For the sake of the climate and
the long-term sustainability of the pension system, we make the following
demands of the Ministry of Health and Welfare and the NPS.
1. The Ministry of Health and Welfare and the NPS must adopt, by the
end of this year, coal investment restriction criteria that bar investment in
companies deriving 30% or more of their revenue from coal power.
2. The Ministry of Health and Welfare and the NPS must declare a
2040 net zero target for financed emissions and establish a concrete
implementation plan.
28 May 2024
KFEM Gyeongnam, Solutions for Our Climate, the youth climate group
BigWave, KFEM Incheon, KFEM Chungnam, the Korea Sustainability Investing Forum,
KFEM, 60+ Climate Action (in Korean alphabetical order) / Jeoung-ae Han,
National Assembly member (Democratic Party of Korea); Wangjin Seo, National
Assembly member (Rebuilding Korea Party)
Remarks: Jongoh Lee, CIO, Korea Sustainability Investing Forum
Investment in coal power is (1) financially risky, with a high
probability of ending up as a stranded asset; (2) environmentally destructive,
accelerating the climate crisis through massive greenhouse gas emissions; and
(3) morally indefensible, threatening health and lives as a leading source of
particulate matter.
That is why major financial institutions worldwide are setting
"net zero targets" for their investment portfolios and, in order to
cut financed emissions, are starting by exiting coal assets or drastically
reducing their exposure to them.
In particular, in a decarbonizing era of tightening global carbon
regulation and carbon-based trade barriers on imported goods, coal assets are
highly likely to turn from income-generating assets into risks that are
difficult to control.
Even so, the NPS's current investment behavior, which prolongs such
investment with the public's retirement savings, is deeply irresponsible and
financially foolish, sacrificing the public's retirement returns, climate
action, and public health and lives alike.
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Contact: finance@kosif.org