Local Government Super (LGS) has added another screen to its "negative screening" approach to responsible and sustainable investing, but has removed the nuclear energy screen.
The fund announced today it had incorporated an additional screen to exclude companies with a material exposure to ‘high carbon sensitive' activities such as coal and tar sands mining as well as coal-fire electricity generators.
It said the threshold for this ‘high carbon sensitive' negative screen had been set at a minimum of one third of company revenue.
Commenting on the move, LGS chief executive, Peter Lambert said the decision was driven by the understanding that the sector would be adversely affected from an investment perspective by the likely transition to a lower carbon economy as governments respond to the increasing threat of climate change.
"Climate change is an unarguable scientific reality and one which poses a very real investment risk," he said. "Governments around the world have begun to act on climate change, which is having a negative impact on the future outlook for the coal industry."
Lambert said that in moving away from high carbon investments, the fund was supporting environmental and economic alternatives to investing in the sectors."
"At the same time while the use of renewable energy will increase, it will not be able to meet all the energy needs around the world in a lower carbon future, so alternatives need to be considered," he said. "Because of this we have decided to remove the nuclear energy screen from our list of excluded industries, as we believe nuclear energy is increasingly becoming a viable, low carbon emitting energy source globally."
"Nuclear energy is currently the only proven alternative to fossil fuels that provides base-load power capacity, so outright exclusion of nuclear energy directly conflicts with our view on the importance of reducing our reliance on high carbon energy sources."