U.K.’s Largest Private Pension Fund to Exit Coal, Tobacco Firms

(Bloomberg) -- The U.K.’s largest private pension manager plans to stop investing in companies involved with tobacco, thermal coal and controversial weapons.

The Universities Superannuation Scheme, which oversees more than 68 billion pounds ($84 billion) of assets, will begin selling its holdings in these industries within two years and will exclude any further investment, according to a statement on Monday from USS’s main investment manager and adviser. In addition to tobacco production and thermal coal mining, the move covers companies that make cluster munitions, white phosphorus and land mines.

Pension funds and other large institutional money managers have faced growing pressure from shareholders, clients, employees and activists to use their resources to fight climate change and advance a raft of other issues such as workplace diversity. This is the first time USS has officially announced its position on exclusions, and follows a review of the long-term financial factors associated with investing in certain sectors.

USS Investment Management Ltd. concluded that the “traditional financial models used by the market as a whole to predict the future performance in these sectors had not taken specific risks into account,” according to the statement. Changing political and regulatory attitudes to certain activities will damage the prospects of businesses involved in industries like tobacco and coal mining in the future, USS said.

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