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| Environmental activists hold a rally in front of the National Pension Service Investment Management headquarters in Jeonju, North Jeolla Province, April 20, to urge the state pension fund to stop its investments in coal-related industries. Yonhap |
KEPCO, OCI, GS, Kumho Petrochemical, LG International face concerns
By Park Jae-hyuk
The National Pension Service (NPS) will discuss divesting from companies mining coal and those generating electricity from it, during its forthcoming Fund Management Committee meeting, according to sources and media reports, Wednesday.
The decision was made after the state pension fund's Special Committee on Responsible Investment & Governance held talks recently on the introduction of "negative screening," which refers to the intentional exclusion of controversial firms from investment portfolios.
"The Fund Management Committee is set to discuss this issue on Friday," one of the sources said on condition of anonymity. "What matters at this moment is the specific timing of the negative screening's introduction and the range of companies to exclude."
Market insiders expect that once the committee decides to adopt negative screening, the NPS will prioritize selling its stakes in domestic firms using coal, given that environmental activists have continued to demand it stop investing in coal-fired power plants here and overseas.
"Foreign pension funds, including the Government Pension Fund Global in Norway, the California Public Employees' Retirement System and the Swedish National Pension Fund, have already declared they will stop investing in coal-related industries causing the climate crisis," environmental activists in North Jeolla Province said in front of the NPS Investment Management headquarters, April 20. "The state-run financial institution managing assets worth 855 trillion won ($768 billion) is still neglecting its social responsibility to cope with the climate crisis."
If the NPS begins negative screening of coal-related companies, it may unload its 6.94 percent stake in the Korea Electric Power Corp., 12.17 percent stake in OCI, 8.67 percent stake in GS, 8.02 percent stake in Kumho Petrochemical and 9.72 percent stake in LG International.
Although the negative screening will likely take effect during the second half of the year at the earliest to reduce any negative impact on the stock market, share prices of the coal-related companies plunged during Wednesday's session, amid fears of the pension fund's possible divestment. Kumho Petrochemical's stock price dropped 7.01 percent from the previous session's close, while both OCI and LG International saw over 4 percent falls in their stock prices.
The NPS is expected to choose companies dealing with tobacco and weapons of mass destruction, such as cluster munitions and antipersonnel mines, as the next targets of negative screening.
When Rep. Nam In-soon of the ruling Democratic Party of Korea pointed out the pension fund's growing investments in so-called "sin stocks" related to alcohol, tobacco and gambling during the National Assembly audit last October, NPS Chairman Kim Yong-jin answered that the Fund Management Committee was reviewing the range of negative screening for responsible investments.
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