Pension funds and power: political and electrical

Australia's second-largest pension fund blacklists thermal coal investments | Reuters

I was thinking of using this story for my round-up of financial news later this year. Now, I don't think I will. As regular readers surely know, in an end-of-year post I go month-by-month through the year just ended listing the big Fin news stories. My choices are not always about the story itself, but about the theme it illustrates.

In May 2024, though? I'll go with something else.

Still, this story illustrates a major point in the financial history of our time. Pension fund managers are powerful people. Not just because they are rich (they usually aren't), and not because they can order armies into motion (they can't), but because they write or refuse to write very big checks.

If a pension fund the size of the Australian Retirement Trust won't invest any further in thermal coal investments on a continent where thermal coal has long been a big part of the energy picture: ... well, it has likely changed that picture. It has put thermal coal in the same category as tobacco or landmines.

Metallurgical coal, the type used in the manufacture of steel, is apparently still something they are open to investing in. Thermal coal, the type used in the production of electricity, is not.

Australia has long been a major exporter of the thermal stuff, as has and is the US.

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