Australian Pension Fund Restricts Coal Investments

By Tsvetana Paraskova of OilPrice.com

Australian Retirement Trust's New Investment Strategy

The Australian Retirement Trust, which is responsible for managing $183 billion (AUS$280 billion) in retirement savings, has decided to put thermal coal on its exclusion list effective from July 1. This move is a part of its strategy to achieve a net-zero emissions portfolio by 2050. Thermal coal encompasses the mining and sale of lignite, bituminous, anthracite, and steam coal to third parties. This information was revealed in the fund's recent updates to its product offerings.

Screening Investments and Exclusion Criteria

The fund will be conducting a thorough screening of its investments and will exclude any direct investments in coal companies that derive 10% or more of their revenue from coal (either estimated or reported) in the most recent financial year. In a statement carried by Reuters, the fund expressed its commitment to achieving a net-zero greenhouse gas emissions investment portfolio by 2050. However, the fund also mentioned that it would apply exclusions in limited circumstances, keeping in mind the best financial interests of its members.

Exclusions for Certain Coal Investments

The fund's exclusions will apply to pooled derivative products that may have indirect exposure to companies involved in the mining of thermal coal. Companies that derive revenue from metallurgical coal used in steel production, coal mined for internal power generation, intra-company sales of mined thermal coal, revenue from coal trading, and royalty income for companies not involved in thermal coal extraction operations will also be excluded.

Climate Change and Investment Decisions

Climate change has become the single largest motivation for investment institutions to exclude companies from their portfolios, according to a 'exclusion tracker' from last year. Investors are becoming increasingly cautious about investing in 'sin industries', which now include fossil fuel companies along with the weapons and tobacco sectors. Pension funds and other institutional investors in Europe have already excluded some major oil and gas companies from their portfolios, while some European banks have reduced financing for fossil fuel projects.

Contrary Investment Strategies

However, not all investors are divesting from fossil fuels. Some believe that owning stocks in these companies could help them influence decisions regarding emissions reductions.

Article by Tyler Durden

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Final Thoughts

This move by the Australian Retirement Trust is a significant step towards achieving a more sustainable and environmentally friendly investment portfolio. It highlights the growing trend of investment institutions taking climate change into account when making investment decisions. What are your thoughts on this development? Do you think more investment institutions should follow suit? Share this article with your friends and let's get a discussion going. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.