Fossil fuel expansion criticisms confronted by KENFO
In a growing debate on the role of firms with fossil fuel expansion plans in net zero portfolios, KENFO, a German public law foundation managing assets for nuclear waste disposal, finds itself under scrutiny.
According to a report by Urgewald, KENFO's 2024 portfolio data reveals significant investments in big oil companies such as Shell (€58m), TotalEnergies (€52m), and BP (€45m). These companies, the report notes, are continuing to expand fossil fuel production, which conflicts with the International Energy Agency's guidance to halt new oil and gas capacity to meet Paris Agreement goals.
Campaigners argue that KENFO's approach, which focuses on carbon intensity metrics at the portfolio level, enables continued backing of firms pursuing fossil fuel expansion plans, thereby undermining climate action and public interest. Urgewald and other campaigners call for KENFO to divest from firms actively expanding fossil fuel production to align with genuine net zero commitments.
However, KENFO disputes these allegations. The foundation argues that a complete divestment from fossil fuel sectors would be meaningless in terms of real-world impact. Instead, KENFO maintains that investments in the energy sector provide stability during geopolitical crises and protection against inflation.
The disagreement extends to the increase in investments in fossil fuels. KENFO denies the findings of Urgewald's report regarding the increase in investments in fossil fuels, stating that its investments in the fossil fuel industry increased by only 3.4% or €791m between 2023 and 2024.
Urgewald, an environmental campaign group, has highlighted that some firms in KENFO's portfolio, such as Sasol Ltd, Xinyi Glass Holdings Ltd, Vedanta Resources Ltd, Idemitsu Kosan Co Ltd, Mitsubishi Corporation, POSCO Holdings Inc, and Hindalco Industries Ltd, are currently pursuing coal expansion.
The SBTi, the global body overseeing the implementation of the Paris Agreement, has set guidelines for financial institutions with exposure to the fossil fuel industry. These guidelines include an expectation to cease all new financing of coal projects and to phase out financing of any new oil and gas projects by 2030. Institutions are also expected to immediately halt the expansion of existing fossil fuel assets.
KENFO, established in 2017 to cover the cost of nuclear waste disposal in Germany, is obliged to achieve the highest possible return at an appropriate level of risk under the Nuclear Waste Management Fund Act. This obligation may contribute to the foundation's investment strategies, which have led to criticism.
As the debate continues, KENFO has responded to the allegations, stating that it actively defends its investment strategy while under pressure to tighten fossil fuel exposure. The updated article on 31.07.2025 includes this response, indicating that KENFO is actively engaging with energy firms to phase out their most emission-heavy and risky business segments, such as coal production.
The dispute over KENFO's fossil fuel assets highlights the increasing pressure asset owners with net zero commitments face as they balance their investment strategies with the need to address climate change.
[1] Urgewald, 2024 KENFO Portfolio Data Report.
- The controversy surrounding KENFO's investment strategies in the fossil fuel industry has raised questions about the role of finance in the energy sector, particularly in the context of net zero commitments and climate action.
- Politics and business intersect in this debate, with campaigners pushing for KENFO to divest from firms expanding fossil fuel production, while KENFO argues that investments in the energy sector provide stability during geopolitical crises.
- The SBTi, a global body overseeing the implementation of the Paris Agreement, has set guidelines for financial institutions with exposure to the fossil fuel industry, including a mandatoryphase-out of financing for new oil, gas, and coal projects by 2030.
