Australia’s No. 2 Pension Fund to Curb Thermal Coal Investments

Amy Bainbridge, Bloomberg News

The Loy Yang Power Station, a brown coal-fire thermal power station, in Traralgon, Australia, on Tuesday, Nov. 7, 2023. After almost a century as Victoria's central provider of electricity — some 90% comes from Latrobe and the broader Gippsland area — most of its mines and power stations are shut or scheduled to close between 2028 and 2035, yet the area has kept decline at bay with plans for solar farms, battery storage and the country's first offshore wind installations. Photographer: James Bugg/Bloomberg , Bloomberg

(Bloomberg) -- Australian Retirement Trust, the country’s second largest pension fund, plans to stop directly investing in most thermal coal companies as it targets net zero across its portfolio.

The A$280 billion ($184 billion) fund will add the exclusion to listed equities from July 1, according to an emailed statement. It follows similar moves from other large funds in Australia’s highly competitive A$3.7 trillion pension industry.

“Australian Retirement Trust will add an exclusion of direct investment in Australian and international shares asset classes for companies that generate more than 10% gross revenue in the most recent year of financial reporting from the mining of thermal coal and its sale to third parties,” ART said in an emailed statement.

The screening doesn’t apply to investments in indexes or derivatives that may have exposure to thermal coal. The news was reported earlier by The Australian.

Read more: Woodside Under New Climate Change Pressure From Australia Pension Body

Australian pensions are under pressure to back up their net zero commitments with action, as they compete for members that are becoming increasingly green-conscious. Funds have also been publicly pressured by environmental groups to divest from polluting companies.

Aware Super, with A$163 billion, similarly has a fund-wide exclusion on companies generating 10% or more of their revenues directly from mining thermal coal. Another fund, A$82 billion HESTA, excludes any listed company that makes 15% or more revenue from the mining of thermal coal.