Finland: Does Nordea’s divesting of coal shares signal shift in Nordic market?

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Helsinki still burns the equivalent of 17 wheelbarrow loads worth of coal per capita annually. (Petteri Juuti / Yle)
Helsinki still burns the equivalent of 17 wheelbarrow loads worth of coal per capita annually. (Petteri Juuti / Yle)
One of the Nordic region’s biggest banks is pulling out of investments in coal.

Though the sums involved are tiny compared to its overall holdings, the move could signal a broader shift in the Nordic market, says Aalto University’s professor of corporate responsibility.

The price of coal is dropping and more investors are steering clear of the fuel, which is closely linked with worsening climate change. The Nordea banking group says that more of its major customers are asking about the carbon footprint of investments.

Nordea, one of the Nordic region’s largest financial institutions, announced on Wednesday that it is divesting itself of all shares in coal mining companies. The move is worth about 100 million euros.

“In the long run demand for coal will decline,” notes Antti Savilaakso, Director of Responsible Investment & Governance at Nordea Finland. “Demand has already dropped in developed countries and there will be a dip in emerging markets within the next few years. And customer demand for this kind of [sustainable] investment solutions is growing steadily.”

According to the Carbon Tracker Initiative, the price of coal has fallen by 40 percent since 2011. The financial news agency Bloomberg’s Global Coal Index shows that the value of 32 major publically-listed coal companies has plunged by 56 percent during the same period.

Savilaakso says that Nordea has made a decision in principle that its investment funds will sell off shares in any firms that are planning new coal mines. These are mostly Asian companies, along with some from Australia, the United States and Russia.

Halme: More appealing renewable options

Minna Halme, Professor of Corporate Responsibility at Aalto University, tells Yle that Nordea’s decision is a sign that investors are beginning to wake up to the risks of putting money into coal.

“The fact is that coal ownership is becoming riskier. Climate change is accelerating and countries around the world have to slow it down. Coal is one of the largest sources of carbon dioxide. On the other hand, from a technological and commercial perspective, there are beginning to be ever more significant alternatives in terms of solar, wind and other renewable energy sources as well as in energy efficiency,” Halme says.

Big international institutions such as the World Bank and IMF have in recent years decided to cut off support for any new coal mines or coal-fired power plants. This raises the threshold for such investments.

Setting an example

“In the same way, decisions by investors such as Nordea will raise the cost of new coal production capacity,” Savilaakso points out.

However, in the overall picture of international energy markets, withdrawing 100 million euros from coal mines is the equivalent of moving coins from one pocket to another. Nordea, for instance, controls some 150 billion euros’ worth of its customers’ money.

Within the Nordic region, though, the megabank’s decision may be influential in encouraging others to follow suit.

The International Energy Agency estimates that worldwide investments in renewable energy in 2013 totalled some 250 billion dollars – less than one quarter as much as was invested in fossil-based energy.

In Finland coal accounted for some 15 percent of energy usage in 2013, the third-largest source behind nuclear and hydroelectric.

Related stories from around the North:

Canada: Arctic mining – unexpected social negatives for Inuit women, Radio Canada International

Finland: Finland’s Economic Affairs Minister calls for special audit of Talvivaara mining company, Yle News

Greenland: Analysis: Implications of Greenland’s decision to allow uranium mining, Blog by Mia Bennett

Norway:  Svalbard coal mine cuts 100 jobs to reduce costs, Barents Observer

Russia: Analysis – Putin shutters Russian indigenous peoples’, Blog by Mia Bennett

Sweden:  Artists boycott market in Arctic Sweden over mining conflict, Radio Sweden

United States:  Alaska – Judge temporarily halts EPA process on Pebble Mine, Alaska Dispatch

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