To achieve the global target of <2°C of global warming, the use of thermal coal is required to be phased out before 2050. This briefing highlights the ways in which various financial institutions are increasingly implementing policies to divest from coal to reduce global emissions and climate risk from their portfolios.

The briefing provides a timeline of Nordic pension funds’ divestment strategies, which includes the following:

• In 2013, Storebrand of Norway first divested from coal and tar sands and has been since expanding its policy. Later in 2018, it expanded its climate strategy to exclude companies with >25% of their revenue from coal-related activities.
• In 2014, Norway’s largest pension fund KLP began blacklisting firms with 50% of their revenues from coal-based activities. Then in 2019, it excluded any company that receives 5% of the total revenues from coal activities.
• Since 2015, Norway’s sovereign wealth fund (SWF), the Government Pension
  Fund Global (GPFG) has tightened its coal exclusion criteria and over four years divested from 71 coal companies. In 2019, GPFG announced that 2% of the fund’s total assets would be invested in unlisted renewable energy infrastructure assets.
• In June 2018, the Fourth Swedish National Pension Fund AP4 divested 20 thermal coal companies and adopted an exclusion threshold of 20% of revenues from coal.
• Sweden’s state-owned pension fund AP7 has employed a blacklist for firms engaged in severe environmental harm or corruption and divests firms that are actively undermining and/or funding lobbying against the Paris Agreement.

Other institutions included in the list include Danske Bank Asset Management, Denmark’s MP Pension and Swedish Pensions Agency Pensionsmyndigheten.

The briefing also highlights the sustainable policies adopted by the Nordic insurers and banks regarding the transition away from fossil fuels, especially coal:

• In 2015, following Oslo’s decision to become a fossil fuel-free city, the city’s wholly-owned life insurance firm Oslo Pensjonsforsikring divested from coal, oil and gas.
• Since 2015, Finland’s Ilmarinen Mutual Pension Insurance Company has been promoting the transition to a low-carbon economy. In 2020, it revised its goals to have a carbon-neutral portfolio by 2035.
• In 2015 Nordea, the largest Nordic bank blacklisted coal mining companies from its lending and asset management investment portfolio.
• In 2016 DNB, Norway’s largest private financial services group, released policy excluding new clients with more than 30% of revenues from coal power.
• In January 2020 Swedbank Robur, a subsidiary of Swedbank, stated that all its investments would be carbon natural by 2040 and exclude any company with revenues of >5% from coal.

Development finance institutions that provide risk capital for economic development projects on a non-commercial basis have been investing heavily in renewable energy with policies strongly aligned with the Paris Agreement. Furthermore, the six export credit agencies in the Nordic Region have signed the now outdated OECD policy restricting lending to coal-fired power projects.

Although Nordic financial institutions are leading the world for climate policy, Norwegian-based international energy company Equinor’s plans to drill in the Great Australian Bite highlight the need for more ambitious policy that covers the whole fossil fuel industry.

1. Nordic financial institutions are leading the world on fossil fuel divestment policy many of which are in line with the Paris Climate Agreement.
   
2. Many Nordic pension funds are expanding their climate policy to blacklist or exclude investment into companies that derive a certain significant proportion of their revenue from fossil fuels. Exclusion thresholds include no more than 5% of revenues for KLP, no more than 25% with a 5% reduction yearly for Storebrand, and Danske Bank Asset Management uses a no more than 30% of total revenue from coal.
3. Nordic banks including Nordea, DNB, Swedbank, Handelsbanken, and SEB are no longer providing finance to coal or new coal power plants and will not enter into new business with companies holding major business in the coal industry.
4. Norden expansion in oil and gas remains problematic and out of alignment with the Paris Agreement. An example of this is Equinor’s plans to commence deep-sea drilling in the Great Australian Bite.
5. KLP has implemented a very strict exemplary exclusion policy which results in complete divestment from any company which derives more than 5% of its total revenue from coal activities.
6. Many nordic financial institutions are taking a gradual approach to divestment from coal with yearly strengthening of coal policy.
7. The Bank for International Settlements warned that "green swan" events, or climate-related disasters, could trigger the next systematic financial crisis.