August 31, 2020 Read More →

Australian pension fund Cbus targets carbon-heavy coal and gas investments

The Guardian:

Construction and mining industry super fund Cbus says it will slash emissions from its investments by 45% within the next 10 years, putting carbon-intensive companies on notice that they will need to demonstrate how they will cut greenhouse gas emissions in order to stay within the fund’s $54bn portfolio. Cbus has also expanded an existing pledge to hit the Paris agreement target of zero emissions by 2050 in its property and infrastructure investments to cover its entire portfolio.

Its chief investment officer, Kristian Fok, stopped short of ruling out any investment in new thermal coalmining but said any such business would face an extremely high hurdle to attract Cbus’s money.

“I’m not going to rule out anything, but the hurdles are going to be so high for these things, because the way we would see it is that it would have to be highly competitive against the alternatives,” he said. “Basically, we now have a [carbon] budget in our portfolio, so it would have to be more compelling than something else.”

Institutional investors such as pension and superannuation funds have been ratcheting up the pressure on big emitters, such as mining companies, to slash their carbon output.

In April, Norway’s US$1.1tn Government Pension Fund Global, one of the world’s biggest investors, put BHP on notice that it needed to get out of thermal coal or the fund would dump its stock in the company. At the same time, it announced it had sold its stake in Australian energy company AGL, which owns coal-fired power stations including the carbon-intensive Liddell plant in New South Wales.

Asked if Cbus would be willing to take shares in a BHP coal spin-off, Fok said the new framework wouldn’t stop the fund from doing so. “But what it does make us look very carefully at is what price we’re paying for it,” he said. “In relation to thermal coal, we would look at it in relation to the global economy. But it’s quite clear the lifecycle of thermal coal is shorter than the next fossil fuel, which is gas – but the lifecycle of gas is shorter than what it used to be as well.”

[Ben Butler]

More: Construction and mining industry super fund puts carbon-intensive companies on notice

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