Duke Energy Corp.’s (NYSE:DUK) environmental record has caused Norway’s sovereign-wealth fund to say it would no longer invest in the Charlotte, N.C.-based utility. In addition to the parent company, the fund also banned investment in subsidiaries Duke Energy Carolinas LLC, Duke Energy Progress LLC, and Energy Progress Inc. At the end of 2015, Norway’s fund held $304 million of Duke Energy Corp. shares, $77 million of Duke Energy corporate bonds, and $85 million of corporate bonds in subsidiary Duke Energy Carolinas LLC.
Norway’s sovereign-wealth fund is the world’s largest. The fund manages more than $900 billion, amassed from the country’s oil wealth. Norway enforces a set of ethical standards for its investments that were set up more than a decade ago. Norway’s parliament recently imposed a coal prohibition that excluded 52 coal-exposed mining companies and utilities from investments.
The ban on Duke Energy was not part of that exclusion, although it is a heavy consumer of coal. Duke Energy’s exclusion came due to its conduct and causing severe damage to the environment. The company’s discharges from its ash basins seem to be the catalyst for the judgement. The ash basins contain ash left over from burned coal mixed with water and are stored at coal-fired power plants in North Carolina. Duke and its subsidiaries have been repeatedly fined for leaks and pollution from the ash basins.
Duke said that Norway’s central bank didn’t take into consideration that it has made strides in its environmental record. Duke has retired more than 40 coal units in the last five years. Duke said in a statement, “We have made significant progress closing ash basins in ways that put safety first, protect the environment and minimize the impact to local communities.” The company has also reduced its carbon emissions by 28 percent over the past decade.
Norway has previously made similar judgments to divest from other global giants. The wealth fund stopped investing in Wal-Mart Stores in human-rights allegations. The fund pulled its investments from Rio Tinto PLC in 2008 over accusations of environmental damage. The fund currently has a list of 33 companies whose conduct risked breaching its ethical standards.