$185 Billion Australian Retirement Trust Plans Thermal Coal Divestments

The fund will divest from companies who generate more than 10% of their revenue from coal production.



The Australian Retirement Trust, the second largest superannuation fund in Australia, announced on Thursday that it would exclude thermal coal companies from its investments. The retirement trust manages A$280 billion ($185 billion) in assets.

The exclusions were announced in a May 2024 product update.

The exclusion on thermal coal, which the fund defines as companies engaged in the mining of thermal coal and its sale to external parties is effective July 1, 2024. The fund’s threshold for excluding companies is if they generated more than 10% of their revenue from thermal coal in the most recent year of financial reporting.

The fund currently excludes tobacco companies with a 5% revenue threshold and companies involved in the manufacturing of landmines and cluster munitions, as well as companies that own or have ties to these companies. 

The exclusion on thermal coal will not apply to companies that derive their revenues from coal used in the production of steel, coal mined for internal power generation, intra-company sales of mined thermal coal, or coal trading. 

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The Australian Retirement Trust was founded in 2022 by the mergers of SunSuper, QSuper and the Australian Post Super Scheme and provides retirement services for its two million members. The fund’s balanced investment option, which adopted the investment strategy of its predecessor, Sunsuper Balanced investment option, reported an annualized 8.3% over the past 10 years.

In the U.S., some of the largest public pension funds, including the California Public Employees’ Retirement System and California State Teachers’ Retirement System, have divested from thermal coal.

And in 2023, the Institute for Energy Economics and Financial Analysis reported that more than 200 “globally significant financial institutions,” including banks and asset managers, had established exclusion policies for coal-related assets.

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Defined Benefit Plans Returned 4.47% in the First Quarter

Strong equities boosted returns for asset owners in the first quarter of 2024. 



Asset owners had strong Q1 2024 returns, primarily boosted by equities, according to Confluence’s investment metric plan universe report. The investment metrics plan universe is an analytical tool which sources data from 4,000 asset managers and asset owners.
 

Confluence is a technology solutions company, which provides services such as data-driven analytics to compliance and regulatory solutions for firms in the investment management industry.  

According to Confluence, its tracker of the defined benefit plan universe returned 4.47% in the first quarter. Of the asset owners in this tracker, endowments and foundations outperformed a 60/40 portfolio, which returned 4.63%.  

Endowments and foundations were the highest returning of all the types of asset owners in the plan universe; these institutions returned roughly 5% in the first quarter and a median 14.54% for the year ended March 2024.  

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In the first quarter, corporate DB plans had the highest returns, at just under 8%. Public DB plans returned roughly 5%, Taft Hartley plans returned just over 5%, and health and welfare plans returned just over 2% 

For the one-year period ending March 31, corporate DB plans returned roughly 8%, public DB plans returned just over 14%, Taft Hartley plans returned nearly 12%, and health and welfare plans returned just over 8%.  

Equities were the primary driver of investments in the first quarter, the asset class returned just under 10% in the first quarter and 23.18% in the one-year period ending March 31. Returns for alternatives were flat in Q1 but brought in 7.39% over the past year. Real estate was the only asset class with negative returns, with slight negative returns in the first quarter and down 10% return over the past one-year period.  

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