Australia’s LUCRF super fund divests tobacco, cluster munitions

Awards ESG-screened mandate to Northern Trust

The Labour Union Co-operative Retirement Fund (LUCRF), the $A4bn (€2.7bn) Australian superannuation fund, says its board has approved the negative screening and divestment of tobacco companies and cluster munitions manufacturers – citing “long-term investment risk”.
The fund – Australia’s first industry superannuation fund, having been founded in 1978 – has also awarded an ESG-screened index mandate to Northern Trust.
The fund’s board said it has directed its Investment Oversight Group to divest of investment in the tobacco and cluster munitions industries “over the next 18 months”. The 180,000-member fund said the decision “strongly aligns” with LUCRF’s own values and is consistent with the UN-backed Principles for Responsible Investment of which it is a signatory.

“LUCRF Super members trust us to act in their best interests and this approach takes into account the long-term investment risks and reputational risks faced by the fund,” the fund said in a statement. “It is important to cease investing in sectors which are known to have a significant impact on people’s wellbeing. Putsimply, it is the right thing to do.” As part of the process, the fund has selected Northern Trust Global Investments to run an A$220m World ex Australia index mandate incorporating environmental, social and governance (ESG) screens. The mandate is designed to exclude tobacco companies and cluster munitions manufacturers.

“Put simply, it is the right thing to do”

ESG screening is a core component of our investment decision-making process,” said Roger McIntosh, head of investments at LUCRF. Northern Trust’s ability to provide a customized solution was a key factor in it winning the mandate, he added.

“Increasingly we are seeing clients maximize the benefits of combining indexing strategies with ESG criteria,” said Bert Rebelo, head of business and strategy for Northern Trust Asset Management in Australia and New Zealand. He called it a “landmark mandate”.