Germany has a state fund: the fund for financing nuclear waste disposal, Kenfo. He too has recently suffered from developments on the financial markets. The result: a loss in value of more than three billion euros.
The German state fund had to accept a loss in value of around 3.1 billion euros last year. Compared to the previous year, this is a minus of 12.2 percent. The hitherto unpublished annual balance of Kenfo is Report Mainz before. Accordingly, the total assets of the fund shrank to 21.7 billion euros as of December 31, 2022.
The Kenfo was founded in 2017 as a foundation under public law. The foundation’s assets come from the approximately 24 billion euros that the operators of the nuclear power plants in Germany had transferred at the time. The German state intends to use the money to finance the safe disposal of radioactive waste for several decades. According to the plans of Federal Finance Minister Christian Lindner (FDP), the foundation should also be responsible for the administration and investment of the so-called share pension in the future.
Portfolio with more than 9000 individual stocks
Since it was founded, Kenfo has invested the money of the power plant operators in a broadly diversified portfolio, which mainly includes government and corporate bonds, shares and investments close to the money market. According to its own presentation, the assets now consist of more than 9000 individual values, the Kenfo invests in more than 90 countries worldwide.
According to the annual balance sheet for 2022, the fund lost 16.5 percent in value for government bonds from industrialized nations, and for shares and so-called REITs (i.e. listed real estate investment companies), the minus is 15.7 percent. For comparison: In the DAX, prices fell by 12.3 percent last year, and the broader MSCI World lost 12.8 percent in value. At least when it comes to equity investments, the German state has done a little worse.
Significantly less money paid out
Last year, Kenfo paid 648 million euros to the Federal Ministry for the Environment, which is responsible, among other things, for nuclear waste disposal safety. In 2021 it was still more than one billion euros. In total, the sovereign wealth fund has transferred a good three billion euros to the ministry since it was set up.
According to the balance sheet, Kenfo sold shares from its fund assets for the first time in its history in 2022. In the same way, “the negative development on the financial markets” led to the fact that the hidden reserves melted significantly, from around 3.4 billion euros (end of 2021) to only 51 million euros (end of 2022).
Discussion on the sustainability of the sovereign wealth fund
In its annual balance sheet, the fund gives a positive assessment of its own efforts to make its investment policy more sustainable than before. By 2025, the aim is to reduce the CO2 intensity of the equity and corporate bond portfolio by 20 percent. Kenfo assumes that this goal will be achieved.
In the past, the sovereign wealth fund had drawn criticism on several occasions because the approximately 9,000 individual values also included investments that were considered to be less climate and environmentally friendly. For example, at the end of 2021, Kenfo owned shares in oil companies such as BP, Shell and also in the Russian Lukoil. Likewise, 20 million euros were invested in Azerbaijani government bonds. Azerbaijan’s President Ilham Aliyev has been criticized for human rights violations and war crimes for years. Kenfo has not yet published a more up-to-date list of its portfolio.