Kommunal Landspensjonskasse (KLP), a $70.5 billion Norwegian pension fund, is divesting a combined $68.4 million from Phillips 66, Enbridge Inc., Marathon Petroleum, and Energy Transfer Partners, calling the companies’ involvement with the Dakota Access Pipeline (DAPL) “an unacceptable risk of contributing to serious or systematic human rights violations.”
The nearly 1,200-mile long pipeline was built to transport oil through North Dakota, South Dakota, Iowa, and Illinois. It has drawn heavy opposition over a potential risk of water contamination at the Lake Oahe pipeline crossing, as well as issues concerning Native American tribal sovereignty.
“This has been a difficult case,” Annie Bersagel, acting head of responsible investments at KLP Kapitalforvaltning, said in a statement. “In making the decision to divest, KLP places significant emphasis on the UN Special Rapporteur’s assessment, a previous recommendation on exclusion from the Council on Ethics for the Government Pension Fund Global, as well as the lack of progress through active ownership.”
KLP had equity and fixed income investments of approximately $22.5 million in refining and logistics company Phillips 66, which owns 25% of the pipeline, and $32.3 million in Canadian energy infrastructure firm Enbridge Inc., which owns a 27.6% stake.
KLP had investments of approximately $7 million in Marathon Petroleum Corporation, a refiner, retailer, and distributor of oil and gas products. Marathon Petroleum has a 9.2% stake in the pipeline.
Energy Transfer Partners (ETP), a subsidiary of Energy Transfer Equity L.P., is a US-based pipeline and energy infrastructure company, and is the DAPL project operator. KLP had fixed income investments in ETP of approximately $6.6 million.
The fund said it has been actively following the events surrounding the construction of and protests over the pipeline during the past six months. It said it engaged in dialog with the companies, the Standing Rock Sioux Tribe, the tribe’s attorney, environmental and human rights organizations, pipeline experts, and individuals demonstrating near the construction site.
In order to get back in good graces with the fund, KLP said it expects the companies to:
- Develop policies and practices designed to address flaws in the consultation process that the UN Special Rapporteur has outlined by aligning company policies with international standards.
- Cooperate fully in the pending lawsuit filed by the Standing Rock Sioux Tribe.
- Develop a plan for addressing concerns related to the risk of water contamination from a pipeline spill that also includes collaboration with the affected tribes and communities.
- Conduct a full accounting of any deficiencies in the Dakota Access Pipeline human rights due diligence process and develop a plan for future collaboration with affected stakeholders that addresses deficiencies identified.
“We have had a long and thorough process on this case,” said KLP CEO Sverre Thornes. “It has been complicated, but I am confident that we have now reached the right conclusion.”
By Michael Katz