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19 Apr 2022, 12:23
Edgar Meza

RWE nearing showdown with activist investor over future of brown coal division

WirtschaftsWoche

Enkraft, a major shareholder of German energy company RWE, is calling for the utility to quickly spin off its brown coal activities, financial weekly WirtschaftsWoche . Fellow shareholder and former Goldman Sachs executive Thomas Schweppe has joined Enkraft and its CEO Benedikt Kormaier, in pushing for the move. Enkraft is heading for a public showdown with RWE鈥檚 management at the end of April, when its motion will be considered at the company鈥檚 general meeting. Kormaier is calling on RWE鈥檚 board to come up with a plan to separate its coal division within a year. RWE has in recent years made a remarkable turnaround, seeking to become a model green company when it comes to the energy transition. It is planning to invest some 50 billion euros in renewables by 2030, 15 billion of that in Germany. RWE鈥檚 share price has been steadily climbing along with its positive public relations. Yet fossil fuels, particularly lignite, remain a heavy burden for the company despite increasing profits, WirtschaftsWoche points out. It is also considered damaging by investors who align their portfolios according to environmental, social, and governance (ESG) criteria. Enkraft has said that RWE was "no longer investible" for many due to stricter sustainability criteria. Kormaier has previously argued that divesting the lignite operations and focusing on renewable energy would provide RWE with 鈥enormous potential to raise value". RWE counters that splitting off the division would not reduce CO2 but would cause 鈥渃onsiderable uncertainty for the employees and regions affected. The company is however considering placing the division in a foundation, something to which Kormaier is open to.

While RWE no longer sees coal as a core business, lignite-fired power plants account for 7.6 gigawatts (GW) of the company鈥檚 total 36 GW production capacity, with another 1.5 GW coming from hard-coal-fired plants.

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