Industry super fund HESTA has announced that it will restrict investments into thermal coal across its whole portfolio as part of a efforts to foster a shift towards a low-carbon economy.
The decision by the $29 billion heavyweight marks the first occasion that an established super fund in Australia has curtailed its investments in thermal coal.
The new restriction limits HESTA’s new investments in unlisted companies to those that derive no more than 15 per cent of their revenues or net asset value from operations in relation to thermal coal, including exploration, new or expanded production or transportation.
The restriction will apply to HESTA’s entire portfolio, as opposed to just green or responsible investment products as is at present standard practice amongst its industry peers.
CEO Anne-Marie Corboy said the decision was motivated by the long-term risk associated with investments in fossil fuels such as coal amidst mounting concern over the impact of global warming.
“HESTA is of the view that new or expanded thermal coal assets face the highest risk of becoming stranded before the end of their useful life,” she said in an official statement. “It is not prudent, nor in the long-term interest of members, to invest in the expansion of these assets.”
According to Corboy, HESTA’s withdrawal from thermal coal is part of a long-term strategy to make more conscientious investments that not only help reduce environmental impacts, but also better suit the needs of super funds members.
“The push to limit the impact of global warming requires economies to move to a lower-carbon intensive future and investors have an important role to play in this transition,” she said. “HESTA believes that further investment in developing new, or expanding existing, thermal coal reserves is inconsistent with this imperative to reduce carbon emissions.”
HESTA’s decision follows the launch of a global online campaign lobbying major institutional investors to reduce their fossil fuel-associated holdings. According to the 350.org campaign, super funds around the world are amongst the biggest investors in conventional fossil fuels, with more than 55 per cent of global superannuation tied up in coal, oil, gas or other climate-exposed investments.
Earlier this month, Australian Greens candidate Simon Sheikh also launched what he claims is Australia’s first fossil fuel free superannuation fund – Future Super, in order to cater to investors who are concerned about the impact of their economic decisions on climate change.
The backers of Future Super believe there is ample demand on the market for more environmentally aware investment options, citing a study published by The Australia Institute last year indicating that one in four Australians would be willing to move their superannuation to funds that refrain from investing in coal and coal seam gas – a share of the market worth roughly $247 billion.