Leading Australian pension fund ditches coal holdings

LGS chief executive cites increased risks of fossil fuel assets as reason for divestment

A test coal pit in Australia's Galilee Basin (Pic: Greenpeace/Andrew Quilty)

A test coal pit in Australia’s Galilee Basin
(Pic: Greenpeace/Andrew Quilty)

By Ed King

An Australian pension fund worth $8 billion says it will ditch holdings in coal companies, branding climate change a “very real investment risk”.

Local Government Super is one of Australia’s largest public sector funds, with 90,000 members, and is the first to publicly announce plans to divest from coal.

In a statement, LGS chief executive Peter Lambert said the fund believed support for carbon intensive forms of energy like coal and oil from tar sands were no longer sound investments.

“With trends such as competitive pressures in the coal industry, concerns in China over pollution and water, and the introduction of energy and carbon efficiency standards on the utilities sector in the US indicating a shift away from a high carbon to a lower carbon economy, we believe that support for these sectors will decrease, as will shareholder value,” he said.

Lambert added the fund had decided to remove nuclear from its banned list, as it did not believe renewables would be able to meet global demand for electricity.

According to the Financial Times, LGS will sell AU$ 25 million worth of shares in companies that make more than 30% of their revenues from coal use.

Coal generates just over 40% of the world’s electricity, and is the second largest source of energy after oil. But when burnt it emits twice as much CO2 emissions as natural gas, making it by far the most carbon intensive form of power generation.

Australia’s government is an enthusiastic backer of coal and mining projects and recently scrapped a carbon tax which it said penalised the country’s key industry sectors.

Recent research from the Carbon Tracker Institute suggests US$112 billion worth of coal projects could be under threat if a planned UN deal to curb greenhouse gas emissions is agreed next year.

The LGS announcement comes at a time when a global campaign to encourage funds to divest from fossil fuels is gathering pace.

Last month the heirs of the Rockefeller oil dynasty, which controls US$860 of assets, announced they would sell off their holdings in coal, gas and oil.

Another 800 leading investors announced plans to divest their stocks of climate-harming assets at a UN summit in New York.

Read more on: Climate finance | Divestment | |