Jim Yong Kim
World Bank President Jim Yong Kim (Reuters)

The World Bank is reportedly investing a large amount of money in industries such as coal and tobacco, despite its calls for ethical and low-carbon investing.

Reuters, citing an internal post to staff, reported that the World Bank is investing a part of its $18.8bn (£12.4bn, €16.8bn) staff pension fund in equity index funds that are inclusive of companies with environmental and health problems.

The pension fund has been found investing in, among others, the Russell 3000 index, which includes coal producers Peabody Coal and Arch Coal, and tobacco giant Philip Morris.

The news agency also revealed that World Bank employees have questioned the investment, and asked why the bank does not use socially responsible alternatives.

The investment is in contrast to the bank's proclaimed stance to be away from investments supporting tobacco and coal-based energy industries. The international lender refuses to invest in tobacco production and has banned financial support for the construction of coal-fired electricity except for the poorest countries.

In a recently-released report by the Asset Owners Disclosure Project, the bank's pension fund was ranked poorly in transparency and managing climate risks. The fund's ranking was lower than that of pension funds of companies including British Coal and the state oil fund of Azerbaijan.

The World Bank has a responsibility to manage the money "in the best interest of plan beneficiaries", the bank said in a statement to Reuters.

The bank, which has about 15,000 current employees and around 10,000 retired beneficiaries, operates its pension fund under a separate governance structure. The pension fund assets are held in a separate legal trust administered by its Pension Finance Committee (PFC), chaired by the chief financial officer.