Superannuation Funds Answer Members’ Demands to Divest from Coal

Several of the nation’s largest superannuation firms are divesting from thermal coal in response to member demands.

The Australian Retirement Trust (ART), overseeing over $280 billion (US$185 billion) in savings, has become the largest super fund in the country to exclude thermal coal.

As a global investor, the fund is dedicated to achieving a net-zero greenhouse gas emissions investment portfolio by 2050.

Starting July 1, the fund will not directly invest in companies generating more than 10 percent of gross revenue from thermal coal mining and sales to third parties, as per AAP.

“Australian Retirement Trust implements exclusions in specific situations as part of its sustainable investment strategy in line with members’ best financial interests,” the fund stated.

Brett Morgan, from shareholder activist group Market Forces, praised the new policy for solidifying ART’s avoidance of “climate wreckers” Whitehaven Coal and New Hope.

The fund’s default investment option has had zero exposure to Whitehaven and New Hope since 2022.

“It’s a testament to the members who have demanded more climate action from the fund,” Mr. Morgan stated.

“ART has now formalized its practice into policy and is the largest super fund in Australia to reject investments in thermal coal companies,” he added.

Aware Super, managing over $170 billion in funds, HESTA with predominantly female members in health and community services, and UniSuper are also among the funds making the shift.

Aware Super was one of the first institutional investors in the country to develop a climate change adaptation plan back in 2015.

Speaking at an investment conference in Sydney, CEO Deanne Stewart highlighted that the Aware Super team serves as stewards for both future and current members, emphasizing long-term sustainability over short-term profits.

Assets at risk of becoming stranded include new thermal coal mining operations, coal-fired power stations, and reinvestments in older coal-fired power stations.

Australian thermal coal prices face a bleak outlook in the short and long terms, as reported by Fitch Solutions.

The forecast for the Newcastle thermal coal price in 2024 has been adjusted from $US150/tonne to $US135/tonne, a significant drop from the 2022 crisis levels of $US358/tonne due to the Ukraine war-induced supply shock.

“Long-term expectations suggest prices will continue to decline as the global economy shifts away from fossil fuel-derived energy,” Fitch explained.

“Governments, banks, and mining companies are showing little interest in coal, especially thermal coal,” the statement read.