Australian Retirement Trust, which manages $183 billion (AUS$280 billion) of retirement savings, is placing thermal coal on its exclusion list as of July 1, as it looks to have a net-zero emissions portfolio by 2050.
Thermal coal includes the mining of lignite, bituminous, anthracite, and steam coal and its sale to external parties, the second-largest Australian pension fund said in updates to its product offering.
The fund will be screening its investments and exclude direct investments in coal companies that have 10% of revenue from coal (estimated or reported) in the most recent year of financial reporting.
“As a global investor, Australian Retirement Trust is committed to achieving a net zero greenhouse gas emissions investment portfolio by 2050,” the fund said in a statement carried by Reuters.
However, it applies exclusions in limited circumstances “in accordance with members’ best financial interest.”
For coal investments, exclusions will apply for pooled derivative products, which may have indirect exposure to companies involved in the mining of thermal coal. Exclusions will also be made for companies deriving revenue from metallurgical coal used in the production of steel, 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.
Climate change is the single largest motivation of investment institutions to decide to exclude companies from their portfolios, a so-called ‘exclusion tracker’ showed last year.
Investors have become increasingly wary of investing in ‘sin industries’, which for many now include fossil fuel companies alongside 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 scaled back financing for fossil fuel projects.
Not all investors are dumping fossil fuels—some believe that owning stocks could help them influence decisions at oil and gas firms regarding emissions reductions.
By Tsvetana Paraskova for Oilprice.com