South Korea National Pension Scheme’s continued financing of coal, despite promise to exit, sees campaigners seek redress in court.
South Korean campaigners are hoping, regardless of the outcome, to use a lawsuit involving the country’s National Pension Scheme (NPS) to “get a glimpse” into its true stance on coal phase-out, Hyunji Kim, a lawyer at Solutions for Our Climate, told ESG Investor.
Three NGOs – Green Environment Youth Korea (GEYK), 60+ Climate Action and Solutions for Our Climate (SFOC) – are suing the South Korean Ministry of Health and Welfare, which oversees the country’s US$700 billion national pension fund, for refusing to disclose key documents related to the fund’s coal phase-out policy, which is still under discussion.
The NPS is the world’s third-largest pension fund and has a large influence on the South Korean economy. It is also the largest coal financier in country, holding US$20.5 billion worth of bonds and shares in domestic coal companies and US$8.3 billion in coal companies overseas.
Kim said that in June the Ministry of Health and Welfare declined to disclose key documents related to NPS’ coal phase-out policy agreed three years ago, so it decided to pursue a lawsuit.
“The Ministry of Health and Welfare rejected the information disclosure request on the grounds of the National Pension Act that stipulates that meeting minutes must be made public after a year unless the information is expected to affect market stability or impair the fairness of fund management,” he said.
“However, it is unclear how valid these claims are – especially considering that the NPS has already announced two years ago that it would phase out coal.”
He also said that the Ministry was denying the public “its right to know or have a say in where their hard-earned money is being invested”.
“Process, rather than outcome”
Kim pointed to similar cases overseas, including a current case at the UK Court of Appeal where members of UK pension fund USS are seeking the right to take court action over its governance and lack of climate action. In 2018 Australian pension fund REST settled with a member suing it over failure to disclose its climate risks and plans to address them.
Kim also said that the reason for the lawsuit was not only to demand information disclosure, but clarity on the governance of NPS.
“Through this lawsuit, we hope to send a message to the NPS that people of all generations want and are waiting for its coal phase-out policy, expecting it to play an active role in addressing the climate crisis,” he said.
“We also hope to get answers as to why the NPS has still not established its coal phase-out policy after two years, how far the internal discussion has progressed, and when it is expected to conclude.
“Therefore, it is necessary to pay more attention to the process of this lawsuit regardless of the outcome, because we will get a glimpse into what the NPS and its management committee’s stances are on the coal phase-out policy, and the progress they’ve made so far.”
Within the next month, the Ministry of Health and Welfare will have to respond to the lawsuit. This will be followed by a period of pleadings, after which the Seoul Administrative Court is expected to make a judgment.