HESTA has announced it is implementing a restriction on investments in thermal coal across all its investment options — becoming the first major Australian super fund to do so.
While some other funds have a restriction on thermal coal investments, it is typically limited to their socially responsible investment options. Following the announcement, HESTA CEO, Anne-Marie Corboy addressed the United Nations Climate Summit in New York, calling on governments to enact carbon pricing policies.
She presented the 2014 Investor Statement on Climate Change, which sets a goal to achieve an additional $1 trillion per year in low-carbon investments. HESTA is already one of Australia’s largest investors in renewable energy, climate solutions and other green investments, having committed more than $1 billion to the sector.
The Fund’s Investments and Governance Team expects that the push to limit global warming, through a reduction in the burning of carbon, is likely to impact investments in fossil fuel reserves in the long term. “This ‘unburnable carbon’ is likely to become an increasing risk in the medium to long term, especially for companies heavily invested in thermal coal, or those seeking to develop new long-term assets,” Ms Corboy said.
“We are of the view that new or expanded thermal coal assets face the highest risk of becoming stranded before the end of their useful life. It’s not prudent, nor in the long-term interest of members, to invest in the expansion of these assets,” she added.
Under the new restriction, HESTA will not invest in newly listed companies (from listing onwards) or make new investments in unlisted companies that derive more than 15% of revenue or net asset value from exploration, new or expanded production, or transportation of thermal coal. HESTA will also not participate in the provision of direct funding via rights issues or share placements to already listed companies for expenditure on business expansion in any of these activities.
In addition to this whole of portfolio restriction, a more extensive exclusion applies to HESTA’s socially responsible investment option, Eco Pool. To learn more visit hesta.com.au/responsible