Fossil fuel expansion accusations opposed by KENFO
In a growing controversy, German public law foundation KENFO is under scrutiny for its investments in the fossil fuel industry. The dispute comes as the role of firms with fossil fuel expansion plans in net zero portfolios becomes a subject of heated debate.
KENFO, which manages assets for nuclear waste disposal, argues that investments in the energy sector serve to stabilize its portfolio during geopolitical crises and provide protection against inflation. The foundation states that it cannot selectively avoid investments in companies expanding fossil fuels when purchasing shares or bonds, citing legal obligations to seek the highest possible return at an appropriate risk level.
However, environmental campaign groups like Urgewald have criticised KENFO for its fossil fuel investments, pointing out that KENFO's exposure to such companies has increased slightly according to Urgewald’s analysis. Urgewald advocates for divestment from firms that expand fossil fuel production, a position KENFO explicitly rejects as impractical.
Urgewald's report indicates that KENFO has invested around €58m in Shell, €52m in TotalEnergies, and €45m in BP. The campaign group also highlights that many energy firms in KENFO's portfolio, including these three, are currently expanding their production of fossil fuels.
Some firms in KENFO's portfolio, such as Sasol Ltd, Xinyi Glass Holdings Ltd, Vedanta Resources Ltd, Idemitsu Kosan Co Ltd, Mitsubishi Corporation, POSCO Holdings Inc, and Hindalco Industries Ltd, are currently pursuing coal expansion.
Urgewald pushes for an immediate halt to the expansion of existing fossil fuel assets, while KENFO maintains a more pragmatic stance focused on financial stability and legal mandates. KENFO is engaging with energy firms to phase out their most emission-heavy and risky business segments, such as coal production.
The SBTi, an organisation setting guidelines for financial institutions with exposure to the fossil fuel industry, expects institutions to cease all new financing of coal projects and phase out financing of any new oil and gas projects by 2030. However, KENFO argues that a complete divestment from fossil fuel sectors would be meaningless in terms of real-world impact, as other investors would simply buy these assets.
Urgewald denies counting Microsoft among KENFO's fossil fuel investments and provides a full breakdown of the firms included in its research. The disagreement between KENFO and environmental campaigners underscores the tensions between fiduciary obligations to maximise returns and environmental campaigners' calls for more aggressive fossil fuel divestment aligned with net zero objectives.
[1] Source: KENFO's official statement and Urgewald's report [2] Source: SBTi guidelines for financial institutions [3] Source: KENFO's rejection of divestment from firms that expand fossil fuel production
- KENFO's investments in the fossil fuel industry, totaling around €155 million across companies like Shell, TotalEnergies, and BP, have been criticized by environmental campaign groups such as Urgewald who advocate for divestment from firms that expand fossil fuel production.
- Despite the growing demand for renewable energy and net zero objectives, KENFO argues that divesting from fossil fuel sectors would be meaningless in terms of real-world impact, claiming that other investors would simply buy these assets.
- Some firms in KENFO's portfolio, including Sasol Ltd, Xinyi Glass Holdings Ltd, Vedanta Resources Ltd, Idemitsu Kosan Co Ltd, Mitsubishi Corporation, POSCO Holdings Inc, and Hindalco Industries Ltd, are currently pursuing coal expansion, a practice that Urgewald is urging for an immediate halt to.
