June 2, 2020 Read More →

Australian insurer QBE completes divestment from thermal coal sector

Australian Financial Review:

General insurer QBE has completed its divestment of thermal coal and expects to gradually reduce its investments in other fossil fuels, as it prepares for a surge in demand for environmental and social impact finance after the coronavirus-induced economic crisis.

Chief investment officer Gary Brader, who manages $US23.5 billion ($35 billion) worth of assets, told The Australian Financial Review the insurer had no interest in owning assets that would lose value, such as thermal coal.

On the other hand, he said bond issuers were expressing the desire to issue bonds for a specific social or environmental purpose, and predicted this would pick up steam when the pandemic had passed. “We’re taking a lot of calls from issuers who are saying, ‘I want to bring a bond to market that does some good and doesn’t just fund my balance sheet’. Those conversations are picking up, both on the social side as well as on the carbon-light, renewables [side],” he said.

Mr. Brader’s observation was backed up by a new report, published on Monday by the Responsible Investment Association of Australasia, which showed that the social impact investment market had almost quadrupled in the last two years, from less than $6 billion to around $20 billion.

Early last year, QBE announced it would divest and stop underwriting companies that derive more than 30 per cent of their revenue from thermal coal by 2030. Mr. Brader said that divestment was now complete.

“We’re very mindful of the fact that sitting on assets that other people will not want to buy in the future, or will not want to pay very much for, or very simply fewer people are going to give you a bid – that’s a pretty bad place to be,” he said. “We want to be in things that over time more and more people are going to want to own, and pay more for. And we can see that transition only intensifying.”

[James Fernyhough]

More: QBE divests thermal coal, predicts post-virus green boom

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